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PIA Urges Congress to Renew Terrorism Risk Insurance Act

WASHINGTON, July 13, 2005 - As Congress begins a new round of hearings, the National Association of Professional Insurance Agents provided lawmakers and...
July 13, 2005

Insurance Agents Provide Examples of Nationwide Need for Backstop

WASHINGTON, July 13, 2005  - As Congress begins a new round of hearings, the National Association of Professional Insurance Agents provided lawmakers and President Bush with fresh evidence of the need to renew the Terrorism Risk Insurance Act (TRIA).

Passed in the immediate aftermath of the September 11, 2001 terrorist attacks, TRIA provides a critical federal backstop for losses in the event of another terrorist attack. It is set to expire on December 31, 2005. PIA strongly supports a two-year renewal of TRIA.

In advance of its July 13 hearing on TRIA, PIA presented the House Committee on Financial Services with a representative sampling of letters received from member insurance agents from around the nation documenting the need for a continuation of a federal terrorism insurance backstop. The letters outlined specific TRIA coverage needs by PIA members' small-to-mid-size commercial customers and detailed the adverse impact on each of these businesses if TRIA is not renewed. The letters were also shared with members of the Senate Committee on Banking, Housing, and Urban Affairs, in advance of its July 14 hearing on TRIA.

PIA insurance agents from Ohio, Virginia, Tennessee, Louisiana and Mississippi were among those sharing their experiences and urging congressional support for a two-year renewal of TRIA.

"As a partner in an insurance agency in Tennessee, I have first-hand experience with the negative economic impact that can be created if people are unable to obtain coverage for terrorism risks," said Milton C. Lagasse of Treadwell & Harry Insurance Agency in Memphis. "It is important to point out that this is something that is occurring here in Tennessee, because I think there is a misperception on the part of some that this is a problem that is confined to a few major cities."

Lagasse told of one of his clients who recently purchased a medium-sized shopping center in Memphis. The lender would not make the loan unless the buyer had terrorism insurance coverage that could not have been obtained without TRIA.

Similar concerns are expressed by PIA members in Ohio.

"I have a client who owns a medium sized shopping center in Cincinnati," wrote PIA Immediate Past President Carl G. Stoecklin. "The mortgagee demands that the policy include coverage for terrorism. If I cannot offer this important coverage and a defined act of terrorism occurs, I shudder to think what could happen to the agency or the impact it would have on our professional liability insurance."

Businesses serving the petro chemical industry in the Mississippi Delta region constitute another sector that depends on the availability and affordability of terrorism insurance coverage. 

"I own my agency in south Louisiana and a portion of my agency business serves the insuring needs of the petro chemical industry, a major sector in my state," wrote Robert P. Page of Houma, Louisiana. "This sector has been identified as a potential spot for terrorist attacks. Whether it is the cleaning services hired by the petro chemical corporations, or the food service firms they employ, or the office equipment companies that service their equipment, these firms' ability to continue in business and my success in serving their insuring needs, depend on the availability and affordability of coverage that TRIA enables."

Further up the Mississippi River, businesses needing terrorism insurance include long-haul trucking firms and contractors. 

"There are a number of businesses in my area of central Mississippi that require terrorism coverage as a part of their business insurance," said William J. Morrison, president of the Forest Insurance Agency of Forest, Mississippi. "A number of contractors that work for the gaming industry are required to have such, as are long-haul truckers carrying hazardous cargo. I also have rural water association clients that are concerned about terrorism coverage."

"The economic impact of failing to renew TRIA beyond the present sunset could have devastating consequences on a large number of your constituents," Morrison noted. "I am writing to implore you to support renewal of the Terrorism Risk Insurance Act (TRIA). The terrorist bombings last week in London are evidence that terrorists are still able to coordinate devastating attacks at the time and place of their choosing."

Another PIA member related his experience with clients who own properties leased by the federal government.

"One of our clients, a mid-size owner and lessor of about 40 commercial buildings in northern Virginia, is required by mortgage companies to provide terrorism coverage on the properties," wrote Richard C. Bourne, vice president of Corporate Insurance Management, Inc., who attended the July 13 hearing.  "Some of the buildings already draw undue and negative attention for terrorism potential from insurance underwriters, as they are occupied by the federal government, high profile corporations or are located at an international airport."

"It is my professional belief that without an extension of TRIA, the insurance options available to this property owner would be limited, more costly, and possibly would not be able to coordinate properly with the mortgage industry's typical requirements," Bourne said.

PIA notes the need for the kind of terrorism insurance coverage that is increasingly being required by more lenders is not limited by geography to major urban areas, or to high-profile structures most commonly perceived as targets ripe for attack.

"Our members' commercial customers are not the 'trophy' buildings or locations," said PIA Senior Vice President Patricia A. Borowski. "They are the sandwich shops, the car dealers, the beauty parlors, the barber shops, the small boutiques and countless other enterprises located in and around these properties and that serve them - as well as those that operate more broadly throughout the United States. These customers turn to their PIA agents for their insurance needs.  The Terrorism Risk Insurance Act (TRIA) must be renewed in order that our members' customers can access and afford terrorism insurance coverage.  Without TRIA, they have none."

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA will celebrate its 75th anniversary in 2006.

Milton Lagasse's Letter [PDF file]
Carl Stoecklin's Letter [PDF file]
Robert Page's Letter [PDF file]
William Morrison's Letter [PDF file]
Richard Bourne's Letter [PDF file]

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