BestWeek: Insurers Explore Terror Options as Clock Ticks Toward Deadline.

OLDWICK, N.J. -- The property/casualty industry won a major legislative battle in 2005 with Congress' move to extend provisions of the Terrorism Risk Insurance Act. But with only two years until that extension also expires, the clock already is ticking to find a permanent replacement for the federal terrorism insurance backstop, according to an exclusive story in the Feb. 27 issue of BestWeek.

In the absence of a long-term plan, decisions on terrorism coverage must be short-term ones, noted Aaron Davis, vice president of property syndication with Aon Risk Services. In anticipation of the extension act's expiration, Davis said he has been encouraging clients to maintain their relationships with insurers in the stand-alone terrorism insurance market, or with those that build added protection into their all-risks policies.

Upon the act's expiration, Aon projects that 80% to 85% of the terror capacity will leave the market without the mandated offer of cover, Davis said. He estimates there will be a maximum of $400 million to $600 million of all-risk market capacity available with full-term terrorism coverage, while limits of $1 billion to $1.2 billion will be available through a combination of stand-alone and all-risks.

Also in the Feb. 27 BestWeek:

--Why life insurers are hoping for a pension-reform bill by April 15;

--How the soft market, intense regulatory scrutiny and unprecedented catastrophes fueled intense competition among the leading U.S. commercial insurance brokerages in 2005; and

--Why MetLife Inc.'s incoming chairman and CEO, C. Robert Henrikson, thinks freezing or terminating pension plans, along with the uncertain fate of Social Security, offer opportunities for U.S. life insurers.

Also featured is Best's Insurance Composite Index, which finished the week of Feb. 23, 2006, at 1,158.43, up 13.43% compared with a year ago. The composite index reflects the performance of 137 insurance stocks. The week's top performers were Vesta Insurance Group Inc.; National Western Life Insurance Co.; SeaBright Insurance Holdings Inc.; Safety Insurance Group Inc.; and Aspen Insurance Holdings Ltd. The bottom five were PXRE Group Ltd.; Citizens Financial Corp; State Auto Financial Corp.; James River Group Inc.; and Quanta Capital Holdings Ltd.

BestWeek is published by A.M. Best Co. for insurance professionals, including home office executives, agents and brokers.

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