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Study Says Reinsurance Sector Does Not Have Capital To Withstand High Loss Scenarios

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June 24, 2014
A recently released study by Guy Carpenter concludes that "the reinsurance sector does not have the capital necessary to withstand high loss scenarios that involve nuclear, biological and chemical or radiological weapons." Nonetheless, HR 4871 is designed to reduce the federal costs of the Terrorism Risk Insurance Act over a gradual period of time and to shift the costs to the private sector. That version has been advanced on a party line vote by the House Financial Services Committee. Under the House version, beginning January 1, 2016, the trigger for tapping the program following conventional attacks would increase by $100 million per year to $500 million in 2019. The program trigger for nuclear, biological, chemical, and radiological attacks would remain at the current $100 million. The extension under the House version is 5 years, while the Senate bill provides a 10-year extension.
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