As Senate Debates Terrorism Insurance, Mortgage Bankers Urge Senate To Pass S. 2600

As Senate Debates Terrorism Insurance, Mortgage Bankers Urge Senate To Pass S. 2600
Source: Mortgage Bankers Association

Date: June 13, 2002
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Laura Armstrong (202) 557-2730  
Tisha Richardson (202) 557-2871
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Washington, D.C. (June 13, 2002) – The Mortgage Bankers Association of America (MBA) called upon the Senate to pass the Terrorism Risk Insurance Act of 2002, S. 2600.

"The Senate now has the opportunity to make one thing certain in this time of uncertainty - the assurance that a federal reinsurance backstop will be in place to help sustain economic growth and help protect the economy in the event of another terrorist attack," said James M. Murphy, MBA chairman. "We strongly urge the Senate to immediately pass the Terrorism Risk Insurance bill."

The risks associated with the inability to obtain adequate and affordable property and casualty insurance has threatened to undermine the well-being of the country’s economy. Some examples of how the real estate finance industry has been impacted by this lack of insurance include the following:

  • Many commercial transactions have been delayed, killed or restructured.
  • The new issuance of commercial mortgage-backed securities (CMBS) has been curtailed.
  • Property owners have witnessed cost increases upward of 300 percent in terrorism insurance coverage.
  • Moody’s Investors Service and Fitch Ratings have issued a downgrade watch for a number of properties.
  • Construction jobs to refurbish or build new properties have fallen.

MBA supports a terrorism insurance bill that will:

  • Establish a federal government reinsurance backstop.
  • Place a cap on total losses to the private and public sectors at a negotiated amount. Amounts in excess of the cap should be approved by Congress to protect unlimited liability of taxpayers.
  • Include a provision for the review and evaluation of the need for future government intervention.

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