Terrorism backstop stagnant

The federal US government was recently called on by three elected representatives and Allstate Insurance, to take action on the federal terrorism insurance backstop this year and thus aid in the provision of reinsurance for catastrophes.The elected officials, Congressman Steve Israel and Congresswoman Carolyn McCarthy, who urged the government to create a nationwide federal disaster reinsurance fund dubbed the “Consumer Hurricane and Earthquake Protection Fund” are co-sponsors of The Homeowner’s Insurance Protection Act of 2005. This bill which will provide coverage up to a 1 in 500 year event is meant to instill a reinsurance CAT fund as a federal backstop for natural disasters to come and to encourage state implemented CAT funds by providing the backstop. The fund is meant to be housed in the Department of Treasure so to provide lower-cost reinsurance to state CAT funds and therefore reduce the costs of homeowner’s insurance nationwide.However, Franklin Nutter, president of the Reinsurance Association of America (RAA) says that congress probably won’t take any real actions towards implementing such a fund this year. Nutter says that the legislation, which recently extended the program until the end of 2007, demands that a presidential working group send a report on terrorism insurance to Congress by Sept. 30. Nutter says for this reason it is probable that legislative activity will likely remain stagnant until a new Congress convenes in 2007.