Terrorism Insurance Survey Reveals Disturbing Trends
September 23, 2002
WASHINGTON, Sept. 20 /PRNewswire/ -- In its continuing efforts to clearly identify problems with the availability of terrorism insurance, the Building Owners and Managers Association (BOMA) International today released the results of its national survey on terrorism insurance coverage. The survey clearly documented the significant difficulties many commercial real estate professionals are facing in their attempts to obtain adequate coverage, and the defects in the terrorism policies.
The survey, conducted by BOMA International in September, revealed several disturbing results, the most serious of which showed that more than one quarter of survey respondents were unable to obtain terrorism insurance at any cost. Of the remaining 73 percent who have been able to secure coverage, a full 80 percent incurred higher premiums, caps on coverage, higher deductibles, cancellation clauses of 60 days or less, and/or exclusions for chemical, biological or radiological acts. The premium increases that building owners incurred ranged from an average low of about 20 percent to a high of 200 percent. In addition, the survey also showed that the vast majority of building owners (80 percent) are planning to pass at least some of the cost on to their tenants.
When asked which factor negatively affected their ability to purchase terrorism insurance, 69 percent of survey respondents indicated that it was more difficult to purchase insurance for portfolios due to the building's geographic location.
When it came to negotiating more favorable rates and/or terms, almost half of all survey respondents cited that nothing helped, while 28 percent cited that providing insurers with detailed building data and insurance history helped. Twenty-four percent cited that increased security helped somewhat. Other factors mentioned included long relationships with insurers and timing of renewals.
Undoubtedly, the most disturbing finding from the survey cited that 27 percent of survey respondents are either self-insuring or "going bare" for part or all of their portfolios due to the lack of terrorism insurance available.
"This survey clearly confirms that insurance coverage for terrorism events is largely unavailable at any price, and the product that is available is faulty and does not meet the needs of building owners and managers," said BOMA International President Larry F. Soehren. "As we continue to address these issues on Capitol Hill, it is absolutely necessary for Congress to step forward swiftly to provide a federal backstop in the events of future terrorist attacks."
BOMA does remain hopeful that Congress will act, a feeling that was bolstered during a meeting with BOMA International staff members of the Coalition to Insure Against Terrorism (CIAT), and Secretary of the Treasury Paul O'Neill on September 18. At that meeting -- held to discuss the dire need for Congress to finish action on legislation that would resolve some of the difficulties building owners and managers are facing -- Secretary O'Neill stated that terrorism insurance legislation must not "be left to the vagaries of a lame duck session."
The terrorism insurance survey consisted of responses and opinions from BOMA members that included building owners, property managers, asset managers, facility and corporate facility managers, leasing professionals, developers, medical office building managers, and commercial products and service professionals throughout North America.
Founded in 1907, the Building Owners and Managers Association (BOMA) International is a dynamic international federation of more than 100 local associations. BOMA International's 18,500-plus members own or manage more than nine billion square feet of downtown and suburban commercial properties and facilities in North America and abroad. The mission of BOMA International is to advance the performance of the commercial real estate industry through advocacy, professional competency, standards and research. For more information, visit the BOMA International Web site at http://www.boma.org .
Source: Building Owners and Managers Association International
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