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Thursday, Feb 22, 2024

Law’s Expiration Causes Insurance Worries

Frank McCourt has been redesigning the seats at Dodger Stadium since he bought the team, but he soon might find himself a lot more worried about the building’s insurance premiums than packing in more spectators. The Terrorism Risk Insurance Act, which protects commercial property insurers in the event of a major terrorist attack, is set to expire at the end of this year. If that happens, property owners may find themselves either paying through the nose or completely uninsurable. Owners of highly visible structures like stadiums or downtown skyscrapers could be in more trouble than most. The act ensured that in the event of a major attack, the federal government would assume most of the damage costs. A coalition of business interests has been lobbying Congress to extend the coverage through 2007. “Terrorism is inherently uninsurable,” said Nicole Mahrt, spokeswoman and western region director for the American Insurance Association. “Commercial property owners should be talking to their Congressmen and saying that we should extend this coverage.” California businesses should be especially vigilant in pushing for the extension of TRIA, Mahrt said, because cities like Los Angeles and San Francisco are major centers of commerce and are known throughout the world, making them natural targets of terrorist attacks. According to the AIA, there may be no viable private sector solution for insurance against terrorist attacks. The reinsurance market is not willing to accept more than $4 or $6 billion of the risk, the group said, whereas federal protection covers up to $100 billion in damages. A report published by the Real Estate Roundtable in Washington, D.C. following the recent terrorist attacks in London suggested the economic recovery won’t continue without an extension of TRIA. “A secure economy requires insurance,” the report read. “Without it, investors are reluctant to invest, lenders are reluctant to lend, and entrepreneurs are reluctant to operate businesses.”

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