You are here:HomeIssuesTerrorism Insurance2003Interest in Terrorism Coverage Under TRIA Remains Low

Interest in Terrorism Coverage Under TRIA Remains Low

Insurers have had until today [February 25, 2003] to tell their commercial property clients how much they will charge for terrorism coverage, but so far...
February 25, 2003

Insurers have had until today [February 25, 2003] to tell their commercial property clients how much they will charge for terrorism coverage, but so far few policyholders are buying it. Under the Terrorism Risk Insurance Act (TRIA) passed late last year, primary insurers in the United States have until today to send quotes to customers who had acts of terrorism excluded from their policies following the September 11 terrorist attacks. Others will receive quotes when their insurance comes up for renewal this year.

So far, the number of clients opting for the coverage as backed by TRIA is small. Various brokers are citing price, confusion and the perception by individual clients that they are not at heightened risk as reasons. Reports of the rates being quoted show a wide range from two percent of the property premium to as much as 150 percent.

In an article in today's National Underwriter, PIA National Federal Affairs Committee Chairman Robert Page of Houma, Louisiana, comments on the situation. Page says he has advised his commercial clients that they should purchase terrorism coverage, but many have decided not to. Page says his clients could be prime targets for a terror event, pointing out that most of them are in the middle of the petroleum and chemical industry, just 40 miles from the Gulf of Mexico. Despite his advice, most have turned down the coverage. A major reason, he said, is that his clients do not want to add more to their insurance costs after receiving 60-to-90 percent increases on their premiums in the hard market.

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