- The Washington Times - Friday, May 31, 2002

Insurance companies are raising rates throughout the Washington area, as their concern shifts from an airline crashing into a building to a chemical, biological or nuclear attack that would spread death and destruction.
"Those can go anywhere. People don't really know where it's going to be," said Larry Mirel, commissioner of the District's Department of Insurance and Securities Regulation.
As a result, insurance companies are raising rates particularly for workers' compensation or excluding terrorism coverage for policyholders throughout the area. Terrorism insurance refers to coverage for a variety of damage caused by a terrorist attack, such as physical injury, property destruction or financial loss.
"The whole area is ground zero, and the insurance companies have figured that out, too," said Anita Segreti, owner of Anita Segreti Insurance Inc. in Rockville. Her company primarily insures businesses and commercial buildings.
Mr. Mirel noticed the trend in a survey of businesses and residents that was conducted after a request by Delegate Eleanor Holmes Norton, the District's Democratic nonvoting member of Congress. She asked for the survey in response to reports last month in The Washington Times of business owners near the White House having their insurance canceled or raised significantly.
The D.C. Chamber of Commerce discovered a similar trend in a survey it mailed to 1,400 organizations this month.
Among the 46 business owners who responded to questions about their insurance premiums, "everybody has increased more than 20 percent" since September 11, said Russell Blowe, the chamber sales director.
"They're going up all over the place," he said. "I don't think they're concerned about planes going into buildings anymore."
The chamber decided to survey organizations after Rep. Joe Knollenberg, Michigan Republican, requested more information about insurance rates during a meeting with city officials. Mr. Knollenberg is chairman of the House Appropriations District of Columbia subcommittee.
The chamber's survey will soon be used as the basis of a discussion by a panel of experts on options for business owners trying to reduce expenses, Mr. Blowe said.
Mr. Knollenberg supports the Terrorism Risk Protection Act passed by the House in November and pending in the Senate. It would relieve insurance companies of the need to pay huge claims from acts of terrorism by using federal funds to compensate victims for excessive damages. It also would make insurance policies more affordable for business owners with skyrocketing costs.
"If they can't maintain insurance, they can't maintain a relationship with a bank," Mr. Knollenberg said.
The insurance commissioner's survey was complicated by a low response rate. Of more than 1,000 questionnaires mailed, 15 organizations responded.
"It's turning out to be far more difficult than I anticipated," Mr. Mirel said. "People are not responding. Either they're not responding because it's not a problem or because they don't want people to know they're having problems."
He said he suspected the most likely reason for their reluctance was the unwillingness of employers to acknowledge the risks and higher costs they must bear.
"There are some areas where there clearly are problems," Mr. Mirel said. Most notably is workers' compensation insurance. All respondents reported higher rates.
Other types of insurance are optional for employers. As a result, insurance companies can exclude such items as war or terrorism from coverage.
However, employers are required by law to provide workers' compensation. In addition, any act of terrorism probably would result in a high casualty rate, Mr. Mirel said.
"If that building is destroyed, the workers' comp costs can be horrendous," Mr. Mirel said. "If you take an average death claim in D.C., and you've got a building with 800 or 900 people in it, you got a problem."
The workers' compensation requirement and the threats of terrorism in the nation's capital combine to raise premiums for nearly all employers.
Mr. Mirel refused to name organizations that responded to his survey, saying only that they were some of the city's biggest employers.
"Some of the ones who have problems are media outlets," he said.
He plans to deliver a report on his survey to Mrs. Norton no later than next week.
Members of the insurance industry said living and working in the nation's capital can carry unique dangers.
Vanessa Warrick, a Chevy Chase-based agent for State Farm Insurance Cos., said, "The cities that are more at risk for terrorism, like New York City or Washington, D.C., are the ones that would be affected the most."
Some insurance rate increases are specific to certain industries.
The Inns of Virginia often have hosted guests from the Middle East at their four suburban Washington hotels, said Chris Strissel, president of Strissel Management Inc., the property management company for the hotel chain. FBI agents combed through the company's records looking for suspects after the September 11 attacks.
On Dec. 28, the chain's property insurance agent telephoned to say their premiums would increase 60 percent, beginning Jan. 1.
Mr. Strissel searched the Internet to locate another insurer that raised his property insurance rates 15 percent.
"It's moderate considering the situation," Mr. Strissel said. Many hotel companies had property insurance increases around 25 percent, he said.


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