NU Online News Service, March 18, 4:38 p.m. — Reno, Nev.

Insurers must lobby for federal terrorism insurance backstop legislation, both to protect the health of the industry and to ensure the continued availability of coverage, many speakers said here at the National Association of Insurance Commissioners’ spring conference.

Representatives from property-casualty groups focused on the effects of the Sept. 11, 2001, attacks on p-c insurers, but Edwin Harper, a senior vice president in Fortis Inc.’s Washington office, emphasized in several sessions that the attacks have also hurt group life insurers.

“For the average American family, the cornerstone of life insurance is the insurance that they get at work,” Harper said. “It is a plain vanilla life contract, and it is cheap.”

But reinsurance for group life writers has dried up and “without reinsurance, the economics of group life is turned on its head,” Harper warned. “It can’t continue the way it has been.”

Harper spelled out the economics for a typical group life case.

If there are 1,000 people in a building, then $100,000 of premium might be collected with the hope of making $10,000, he said.

Before Sept. 11, terrorism insurance was free.

After the attacks, two cases of 1,000 lives would cost $90 million.

The result may be that primary group underwriters will refuse to write for employers in cities, Harper said.