Washington, DC, April 21, 2006--The Mortgage Bankers Association (MBA) sent a comment letter to the President’s Working Group on Financial Markets (PWG) regarding their ongoing analysis of terrorism risk insurance.
In the letter, signed by MBA president and CEO Jonathan L. Kempner, MBA states that the need for a long-term terrorism insurance solution is essential to the efficient operation of the commercial real estate finance sector and is also a key component in the nation’s preparedness against future terrorist attacks.
On December 22, 2005 the President signed into law the Terrorism Risk Insurance Extension Act of 2005 (TRIEA). TRIEA extended, with amendments, the Terrorism Risk Insurance Act of 2002 (TRIA) until December 31, 2007. Recognizing that the war on terror is likely to extend well beyond TRIEA’s expiration, a long-term terrorism insurance solution must be developed. TRIEA recognized this and charged the PWG with preparing a report on the long-term availability and affordability of terrorism insurance that also addresses group life coverage and also coverage for chemical, nuclear, biological, and radiological events.
MBA will be examining specific long-term terrorism solution proposals based on a set of principles that will ensure adequate insurance for terrorism, as required by the commercial real estate finance lenders and servicers. These principles include:
Widely Available--Terrorism insurance needs to be widely available, which would require the existing “make available” provision in TRIEA be included in a long-term terrorism insurance solution.
No Interruptions--The long-term terrorism insurance solution should be crafted in a manner that eliminates short-term interruptions in terrorism insurance availability or price shocks when it is implemented.
Affordable--Terrorism insurance needs to be priced in an affordable manner.
All-Peril Coverage--Terrorism insurance will cover all-perils including nuclear, biological, chemical, and radiological threats.
All Terrorism Sources--Terrorism insurance should cover both foreign and domestic source terrorist events.
