Saturday, December 29, 2007

Insuring against terrorism

This is an interesting post about an act of Congress I hadn't read about before. The US government is acting as a re-insurer for terrorism insurance. The government is assuming all risk for terrorism insurance written by insurance companies and doing it for no fees at all. The ultimate in corporate welfare.

That kind of nonsense just needs to stop. It's really outrageous.
under this Act the government requires all commercial (not residential) property/casualty insurers to offer insurance for terrorism risks. In exchange, the government agrees to pay 90% of all losses over a certain amount (determined by a complex formula) that result from certified acts of terrorism. In short, the government provides reinsurance for commercial insurers in the case of a terrorist attack. But unlike normal reinsurance agreements, commercial insurers pay nothing up front for the reinsurance.


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