- The Washington Times - Wednesday, April 3, 2002

The risk of terrorism is prompting insurers to cancel policies or raise rates for businesses near the White House.
The International Economic Development Council, whose office at 734 15th St. NW is a little more than one block from the White House, last week received notice from Liberty Mutual Group that its insurance would not be renewed.
A notation on the policy said, "Non-renewed due to catastrophic exposure." A customer-service representative confirmed that the policy was being canceled because of the risk of terrorism.
Liberty Mutual Group is one of the nation's largest business insurers, specializing in workers' compensation. The Boston insurance company would not disclose other groups and businesses it insures near the White House.
Other businesses in the area have been told to expect higher premiums or terrorism exclusions when their policies come up for renewal.
Ashok Bajaj, owner of the Oval Room and the Bombay Club restaurants that lie within a few hundred yards of the White House on Connecticut Avenue, said his insurance brokers have warned him to expect significantly higher rates when he renews his annual property policies in September.
"I heard it's going to happen to us," Mr. Bajaj said. "The insurance industry has changed after September 11. We'll see what happens."
Lawyer Stephen Bruce, whose law office is at 805 15th St. NW, received a notice from his insurance company last week that says his policies that are due for renewal June 1 "will contain some form of an exclusion of war and military action and terrorism endorsement."
"It might be another reason to move," Mr. Bruce said.
Paul Lawler, chief financial officer for the International Economic Development Council, said he called Liberty Mutual Group when he received the notice of cancellation last week to ask for an explanation.
"We did not meet their location requirements," Mr. Lawler said. He asked a customer-service representative, "Does this mean we're too close to the White House? They said, 'Exactly.'"
The council, an association that helps local governments develop investment and employment, has 28 employees on the ninth floor of the 12-story Walker Building at 734 15th St. NW.
Its policy covered workers' compensation, general liability and excess liability.
"I was a little bit surprised," Mr. Lawler said. "I can understand them trying to limit their risk, but I can't understand why you would cancel the whole policy."
Liberty Mutual Group officials said the risk of terrorism is forcing them to protect themselves from potentially devastating losses.
"Obviously, proximity to the White House would raise issues," said Paul Mattera, a senior vice president. Other concerns include the number of employees in a building who could be injured in a terrorist attack and the number of businesses nearby that might claim coverage by the same company.
The September 11 terrorist attacks created a $40 billion loss for the insurance industry, the biggest in its history. The loss prompted Sen. Phil Gramm, Texas Republican, and co-sponsors to propose a "federal backstop." Under the bill proposed in November, the federal government would reimburse 90 percent of the losses greater than $10 billion for acts of terrorism and leave the rest to insurers. The legislation is pending.
Mr. Mattera said recent acts of war in the Middle East show that the risk to potential targets such as the White House did not end on September 11.
"As time passes, there's a tendency to think this threat is passing," he said. "You look around you, and you realize it's only a matter of time."
Other industry officials said the reluctance of companies to insure businesses near the White House, the Capitol or other potential targets in Washington is expected.
"Any of the key structures in D.C. could be targets," said Loretta Worters, spokeswoman for the Insurance Information Institute, an industry association in New York.
"Terrorism is a big risk," she said. "It's a hard thing to price. You have to remember too that the [September 11] terrorist attacks are the most expensive losses in the history of the insurance industry."
Other organizations and businesses near the White House include the American Bar Association, AFL-CIO, U.S. Chamber of Commerce, Riggs Bank, a branch of Bank of America and several large law firms.
One big Washington law firm, which did not want to be named, said its kidnapping and ransom insurance increased 20 percent this year. Other forms of insurance remained about the same. The law firm often sends lawyers to clients in the Middle East, India and other political hot spots.


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