GE Insurance Solutions Examines TRIA Consequences
This month in a new white paper, GE Insurance Solutions (NYSE:GE) examines the debate over extension of The Terrorism Risk Insurance Act (TRIA) and its effect on the workers compensation system.
In the paper titled "TRIA Sunset and Its Impact on Workers' Compensation", Bill Carney, Workers Compensation Product Leader, writes on the possible sunset of TRIA and the consequences for the workers compensation delivery system should a chemical, biological, nuclear or radiological (CBNR) attack or similar catastrophic terrorist event occur.
"If TRIA is allowed to expire at the end of the year, workers comp insurers and self-insured employers cannot exclude terrorism coverage, unlike property insurers," says Carney. "Consequently, there's a great deal at stake here, not the least of which is the future of the system which was designed to protect America's workers."
Carney continues: "A CBNR attack or series of attacks could affect thousands of workers whose injuries could have long-term consequences and cost billions of dollars."
The article suggests that in the absence of a public-private partnership such as TRIA the workers comp market may shrink in major metropolitan areas due to a shortage of market capacity, reinsurance availability and pressures from rating agencies.
"The role of insurance is to help foster a sound economy," says Carney. "That's why insurers are advocating the extension of TRIA -- so that they can withstand the financial impact of future terrorist attacks and continue to provide people and businesses with the support they need."
Carney also addresses the challenges businesses face in mitigating their terrorism exposures, particularly with respect to workers compensation. In addition, he discusses the emergence of alternative risk transfer mechanisms, the efficacy of state guaranty funds, and the impact of the TRIA debate on self-insurance.
"TRIA is a 'sleeper' for most workers' compensation administrators," says Gregory Krohm, Executive Director of the IAIABC. "They tend to focus on proper indemnity and medical payments without much thought to the financial well from which these checks come. Terrorist actions that hurt the financial solvency of the industry, hurt workers and their employers."
Carney delivered the paper at the 91st Annual Convention of the International Association of Industrial Accident Boards and Commissions (IAIABC) in Philadelphia earlier this month as part of a panel discussion on terrorism. The paper appears in the Fall 2005 edition of the IAIABC Journal. More information about the IAIABC Journal can be found at http://www.iaiabc.org/publications/journal.htm.
The IAIABC is a not-for-profit association representing most of the government agencies charged with the administration of workers' compensation systems throughout the United States, Canada, and other nations and territories. Its mission is to advance the administration of workers' compensation systems throughout the world through education, research, and information sharing. It is governed by an Executive Committee of jurisdictional agency leaders, and maintains a staff headquarters in Madison, Wisconsin, USA.
GE Insurance Solutions (NYSE:GE) protects people, property and reputations. With more than $48 billion in combined assets, the GE Insurance Solutions group of companies is one of the world's leading providers of commercial insurance, reinsurance and risk management services. Combining deep practical risk expertise with GE's business acumen, our dedicated professionals in offices around the globe help customers understand and manage risk more effectively. More information is available at www.geinsurancesolutions.com.
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