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Contact:

Eileen Gillian

Phone:

202-639-0497

Email:

Eileen.Gilligan@pciaa.net

 

 

FOR RELEASE ON RECEIPT

March 6, 2014

PCI Applauds RAND Study on TRIA’s Importance to National Security

 

WASHINGTON – The Property Casualty Insurers Association of America’s (PCI) senior vice president, policy development and research Robert Gordon issued the following statement today in support of RAND Corporation’s study, “National Security Perspectives on Terrorism Risk Insurance in the United States.”

“RAND’s study highlights the importance of TRIA to America’s national security. Terrorism remains a high level national security threat, terrorism attacks cannot be predicted, and terrorism insurance is critical to helping our nation guard against and recover from terrorist attacks,” said Gordon. Having a terrorism risk insurance plan in place before the next catastrophe protects our country’s economic resiliency and security at nearly no cost to the taxpayers.”

The RAND Center for Catastrophic Risk Management and Compensation study, “National Security Perspectives on Terrorism Risk Insurance in the United States” can be found here. PCI is a sponsor of the research.

“While national security efforts have increased, terrorism remains a real and continuing threat. Terrorism is not a generally insurable risk. Neither insurers nor reinsurers can predict the likelihood or severity of the next terrorist event or the efficacy of national security interdiction efforts,” Gordon continued. “As a result, the economic effects of a terrorist attack must be a shared responsibility between government and insurers.”

The RAND study confirms that if TRIA were not reauthorized, some insurers may exit the market leading to less competitive prices. And the immense scale of potential unlimited terrorism losses for workers compensation insurers could impair the ability to pay the claims of injured workers. “One of TRIA’s best attributes is that it keeps private sector insurers participating in the terrorism insurance market, thus protecting taxpayers from most of the cost of potential terrorism losses. Access to terrorism insurance is necessary for businesses to grow, create jobs, and protect the workers they employ,” continued Gordon.

Key points from the RAND study include:

·         Without TRIA, compensation to victims would likely be delayed by political deliberation and litigation.

·         Without TRIA, rebuilding would likely be delayed by ambiguity about compensation.

·         Without TRIA, compensation, and thus rebuilding, could be influenced by political considerations.

·         Without TRIA, compensation may be less or allocated differently than economically optimal.

“PCI’s members appreciate that both sides of the aisle and both sides of the Capitol are increasingly recognizing the importance of TRIA to providing certainty and protection for our economy and we urge Congress to reaffirm its support for this essential and well performing national resiliency plan,” concluded Gordon.

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $195 billion in annual premium, 39 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 37 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.

 

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