Five U.S. states approve terrorism exclusions on homeowners’ cover

Insurance regulators in Arizona, Colorado, North Dakota, South Dakota and Kentucky have approved requests by insurers to apply terrorism exclusions to homeowners’ covers, according to the Insurance Services Office (ISO). While some insurers are still offering terrorism cover in these states, the decision to approve exclusions was made based on concerns that "forced cover" could have presented a financial risk to the relatively small insurance markets in question.Notably, says North Dakota insurance commissioner Jim Poolman, his approval of terrorism exclusions within the state relates to four small insurers who had come under pressure by reinsurers. Hopefully, he adds, market competition will increase between the insurers offering terrorism coverage and those that do not. The fact that state regulators have been forced into making difficult decisions on whether or not terrorism exclusions should be applied within their jurisdictions even though the National Association of Insurance Commissioners (NAIC) is generally opposed to doing so is evident of the urgency for Congress to act on the creation of a federal government "reinsurance backstop" for terrorism risks, he says.