Insurance industry divided over federal backstop for disaster coverage
In the wake of 9/11 Congress created a federal backstop “Terrorism Risk Insurance Act (TRIA)” for disaster coverage. It was meant to be a temporary measure, but the insurance industry and developers became fond of it, and pushed for its extension last December; division now open among insurers on whether this was a good idea
You would think that in the wake of Katrina and Rita, the insurance industry would whole heartedly support the idea of creating a federal backstop for disaster coverage. Think again. Some in the insurance industry support the idea, for example, Allstate CEO Edward Liddy said his company was pushing a House bill which would require state and federal backstop initiatives. Julie Rochman, senior vice president of public affairs for the American Insurance Association, counters: It’s not the right time to have a decision about a federal backstop for disaster coverage. We don’t think the entire country should be subsidizing people living in coastal areas.” Rochman added that so far only Allstate and State Farm support the House legislation. The AIA, along with several other insurance organizations, earlier this year won a hard-fought battle to convince Congress to extend a federal backstop for terrorism insurance.
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