Moody's: Terror Insurance Act Working

The Terrorism Risk Insurance Act has begun to have its intended effect, with rates dropping and policies offering broader coverage, according to Moody's Investors Service.Moreover, the market for terrorism coverage appears to be shifting away from stand-alone terrorism insurance policies, as evidenced by the purchase of terrorism coverage from property-and-casualty carriers by more high-profile borrowers, Moody's said in a report on the performance of the U.S. commercial mortgage-backed securities market in the first quarter. Even Manhattan office properties are seeing an improvement in the availability and affordability of terrorism insurance, the rating agency said. Insurance brokers have reported terrorism insurance quotes ranging from 10% to 30% of the cost of a property's overall property-and-casualty insurance. Rates quoted for higher-profile properties are seen to be generally in line with the recommendations of the Insurance Services Office, Moody's said. In the highest-risk zone comprising all or part of four cities -- Chicago, San Francisco, Washington, D.C., and New York -- the ISO has pegged the maximum increase over the regular property and casualty rate at 25%.