WASHINGTON—Legislation to extend the Terrorism Risk Insurance Act for a decade has been introduced in the House.
Sponsored by Rep. Bennie Thompson (pictured at left), D-Miss, the ranking minority member of the House Homeland Security Committee, the “Fostering Resilience to Terrorism Act of 2013” would also designate the U.S. Department of Homeland Security as the lead agency in the certification process, switching control from the Treasury Department, and adding a provision on information sharing for insureds.
“The Boston Marathon bombings last month serve as a stark reminder that terrorism and mass violence remain both a homeland security and economic threat,” Thompson said in a statement. ”If TRIA is allowed to expire next year, there may be fewer insurers offering terrorism insurance and prices potentially could increase. By extending this program for 10 years, we will ensure much-needed stability and predictability for the business community.”
TRIA was first adopted in 2002 in response to the terrorist attacks on 9-11. It has previously been extended but is set to expire again next year.
The bill was introduced the same day Evan Greenberg, CEO of Ace Ltd., said at a NAIC international regulatory conference in Washington that if the terrorism risk reinsurance program is not extended, ”you won't see terrorism insurance widely available.”
Without TRIA, Greenberg (pictured at right) said, “We wouldn't make terrorism insurance available.”
“If TRIA is cancelled, I am not going to assume the tail risk,” he said, referring to the quid pro quo of insurers making terrorism coverage available in exchange for the government taking the tail risk. “TRIA has done its job…TRIA has worked and there has been a real wisdom to it,” Greenberg said.
TRIA, he noted, just makes the process of terrorism coverage more organized and efficient, adding, “On the Ace balance sheet, there is certainty of exposure, under TRIA.”
Bipartisan legislation introduced in the House in February, “The TRIA Reauthorization Act of 2013,” H.R. 508, would extend the program for 5 years. The lead sponsor is Rep. Michael Grimm, R-N.Y.”
TRIA “continues to protect our nation's economy,” said Leigh Ann Pusey, president and CEO of the American Insurance Association, in a statement.
In the years since September 11, 2001, “the program has provided much needed market stability and predictability for recovery after an event while limiting the exposure of taxpayers to losses,” Pusey said.
“This public-private shared loss partnership frees up capital for business expansion and has helped assure businesses that there can be orderly recovery following a terrorist event without further economic disruption,” she added.
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