The fallout from the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon continues. While insurance and reinsurance companies have agreed to pay $20 billion to $50 billion in costs for the attacks, they are questioning whether to pay future coverage that includes acts of terrorism.
In response to this new terrorism anxiety, several real estate groups delivered a letter to President George W. Bush to ask for his assistance in the insurance quandary. These groups included The Real Estate Roundtable, The Real Estate Board of New York, National Multi Housing Council, National Association of Real Estate Investment Trusts, National Apartment Association, Mortgage Bankers Association of America, International Council of Shopping Centers, Building Owners and Managers Association International and American ResortAssociation.
In the letter, the companies detailed their need for federally supported insurance coverage and asked the government to act quickly to reach a settlement of the terrorism insurance risk.
The following is the complete text of the letter sent to President Bush on Oct. 9.
As a result of the events of September 11, the real estate industry, which accounts for over a quarter of the nation’s gross domestic product, will face severe economic dislocation in the coming months if insurance-related issues tied to terrorism are not addressed by the federal government immediately.
To continue to operate in the normal course of business, the industry needs insurance for risks that have traditionally been insurable, including damage associated with terrorism. The insurance industry recently testified before the House Financial Services Committee that without Federal support, they will not be able to provide terrorism coverage on a going forward basis. Further, as the nation expands its mission against terrorism, the line between terrorism and war becomes increasingly blurred from an insurance standpoint.
We understand that the Administration and Congress are considering proposals to provide government participation in addressing insurance risks for terrorism and war. With many real estate businesses facing policy cancellations and modifications on or before January 1, the Government must act now. Without Government action, our industry will likely face the prospect of breaking promises to lenders, partners and others and operating without necessary insurance coverage. Since operating a business without adequate insurance in many cases is not feasible, and is certainly unwise, real estate businesses will confront the possibility of ceasing or limiting operations until insurance once again becomes available. Without federal action, the ability to, buy or sell properties across the nation may be at risk.
We strongly urge the Administration and Congress to act together to reach a solution to this very significant emerging issue this year.