INSURERS WANT TERROR EXCLUSIONS

In the wake of the Sept. 11 terrorism attacks, insurance companies have begun seeking permission from state regulators to exclude terrorism coverage from a number of policies in 2002, including home, auto and life. Terrorism damage was generally covered in the majority of U.S. policies prior to Sept. 11, and most states require primary companies to get approval to remove it. According to The Washington Post, all 50 states and the District of Columbia have obtained at least one petition for an exclusion, and many others are expected as insurance companies and regulators wait to see what Congress will do to help the industry cover future terrorism claims. Companies requesting exclusions include such giants as Ace and AIG, as well as smaller companies such as Springfield Fire & Casualty, which accounted for some 2,500 policies last year in Illinois. In filing for the exclusions now, the insurance companies are trying to finish paperwork by deadlines imposed by state regulators for notifying policyholders to substantial changes in coverage or for termination of policies. Reinsurance companies have indicated they will not cover terrorism after Jan. 1 because of uncertainty over how to price the risk. About 70 percent of reinsurance policies, which are not regulated by the states, expire at the end of the year.