- The Washington Times - Friday, August 30, 2002

ASSOCIATED PRESS

Maryland regulators have fined a London insurer $125,000 for dropping the state's $500 million annual policy after the September 11 terrorist attacks.

Regulators also ordered the Royal & SunAlliance Insurance Group PLC to continue providing coverage for state government properties, including the Baltimore-Washington International Airport and the stadiums at Camden Yards.

In a 75-page ruling, the Maryland Insurance Administration, which oversees insurance companies operating in the state, said Royal & SunAlliance did not give proper notice or reasons for canceling the state's policy in February.

The order says Royal & SunAlliance USA Inc., the American affiliate of the British firm, must write another insurance policy by Tuesday and pay a $125,000 fine.

"Although Royal's business sustained an adverse impact from September 11, I find that Royal used this occasion to improperly weed out its book of business rather than to underwrite fairly and properly," Insurance Commissioner Steven B. Larsen wrote in the ruling.

The regulators said the company could have raised the rates or excluded acts of terrorism from the coverage rather than drop the policy.

Royal & SunAlliance said Wednesday that it followed all the rules in dropping the state's coverage in February, when the policy was due to expire.

"We are disappointed by the ruling invalidating our decision not to renew the insurance policy for the state of Maryland," said Kedar Bryan, a spokesman for the insurance company.

"Royal & SunAlliance decided not to renew the policy because it could no longer currently underwrite the level of coverage previously written for the state of Maryland," Mr. Bryan said. "This was due in large part by the unavailability of reinsurance caused by the September 11 terrorist attacks."

Insurance companies, which collectively are expected to pay about $40 billion to cover the costs of the attacks, largely lost their reinsurance coverage they buy to reduce their risk.

In turn, insurers have raised rates and dropped coverage for acts of terrorism on public and private property.

Congress is considering legislation that would temporarily protect insurance companies from huge losses in the event of another major terrorist attack.

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