For the forthcoming three years, the Terrorism Insurance Act 2002 requires the Federal Government to cover potential damages for anything up to US$90 billion (£57 billion) on an annual basis.
The US House of Representatives passed a similar Bill a year ago, but was unable to work out details concerning the funding formulas and punitive damages resulting from terrorism-related civil lawsuits.
However, the country's Senate overwhelmingly passed this new Bill just prior to the Christmas recess. As a result of the Bill – which covers damage estimates exceeding US$5 million – the Government will now provide property owners with 90% cover for any terrorism-related insurance claim.
However, this latest measure does not cover the September 11 attacks themselves, which led to an estimated US$40 billion in claims. Consequently, although insurers have praised the Bill for offering what they believe to be a "necessary safety net", US consumer groups have complained that it gives a tax bailout to an already powerful insurance community.
On home shores, of course, the Government brought in its own version of a Terrorism Insurance Act last July. Originally set up in 1993 to cover the threat of attacks from the Provisional IRA, the state-backed scheme – known as 'Pool Re' – originally covered only fire and damage but was then expanded to insure businesses against terror attacks.
The UK insurance scheme now covers destruction by biological contamination, the use of aircraft in attacks and damage by floods. As from the beginning of 2003, it also covers damage from nuclear contamination.
For its part, the ABI has praised this latest move. Talking to SMT, ABI director general Mary Francis said: "Terrorists now have access to new technologies, and are changing their tactics. A vigilant society must be able to respond, and the insurance industry has a key role to play here."
Source
SMT
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