Hub International Ltd., a Chicago-based insurance-brokerage firm, in a partnership with Clements International, a Washington, D.C.-based insurance broker, is targeting that group of property owners by offering property, terrorism and casualty insurance to the owners of buildings in Washington, D.C., that house such diplomatic functions. Hub International also is expanding its offerings to consulates, embassies and missions in Manhattan. Earlier this year, Hub International's New York insurance-brokerage unit, Kaye Insurance Associates Inc., began making property and casualty insurance available to property owners in Manhattan from insurance companies based outside of the U.S.
When it rolled out the coverage offering in Manhattan, Kaye Insurance estimated that about half of the 300 New York buildings owned or occupied by consulates, embassies and missions to the U.N. didn't have property or casualty insurance because it was prohibitively priced or they simply couldn't get insurance, even with the Terrorism Risk and Insurance Act (TRIA) in place. And of those that did have coverage, about half were underinsured.
Washington is home to 125 embassies, according to a Clements spokeswoman. Ken Schreiber, senior vice president of sales and marketing at Kaye Insurance, who is leading Hub International's new Embassy Program, estimates that, like New York, about half of the consulates and embassies in Washington don't have coverage.
TRIA was enacted in November 2002 to provide government-backed terrorism insurance. Under the law, the federal government will pay for 90 percent of any losses once an insurance company's claim has reached a deductible, which was set this year at 10 percent of an insurer's 2002 earned premiums, on at least $5 million in damage caused by foreign acts of terrorism on U.S. property. Although TRIA is set to expire at the end of next year, many property owners may face an insurance dilemma as soon as Dec. 31, 2004, when insurers in some 30 states are expected to fall back on clauses eliminating terrorism coverage if TRIA isn't extended, according to insurance-industry officials.
An aide to Rep. Michael Oxley, R-Ohio, chairman of the House Financial Services Committee, announced last week that the committee will consider the bill sponsored by Rep. Pete Sessions, R-Texas, that extends TRIA until the end of 2007. The announcement was made following the release of a study commissioned by insurers that concluded the U.S. gross domestic product would decline by about $53 billion, or 0.4 percent, and the economy would lose as many as 326,000 jobs if lawmakers allow TRIA to expire.
