The state’s sole provider of workers’ compensation will receive federal assistance in the event of another terrorist attack.
Last week the US Senate overwhelming approved a bill that guarantees federal underwriting of terrorism insurance in the workers’ compensation market. Its passage is considered critical for Rhode Island because only one company, Beacon Mutual Insurance, provides workers’ compensation for the entire state.
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The bill, known as The Terrorism Insurance Act, establishes a program within the Department of the Treasury that allows the federal government to share the risk of loss from short-term terrorist attacks with the insurance industry.
Sen. Jack Reed worked to include specific coverage of workers’ compensation in the bill noting that in the past year, many primary insurers have refused to insure companies where more than 50 people work at one time because if an act of terrorism occurred in that particular workplace, they may not be able to pay the existing claims. Many employers, including employers in Rhode Island, where there is less availability of reinsurance, have had to deal with the higher premiums and less coverage.
“Workers’ compensation has been a safety net available to all workers and their families replacing lost wages, paying for medical needs and death benefits regardless of the cause of the workplace injury or death,” Reed said. “This bill helps Congress and the federal government ensure that the system remain intact to protect victims and their families in times of need.”
Under the legislation passed by Congress, insurance companies will be responsible for paying a deductible before federal assistance becomes available. If the cost of a terrorist attack were greater than $10 billion, the government would cover 90 percent of the losses above the companies deductible.
