A broad business coalition urged Congress in a September 17 letter to swiftly pass a long-term reauthorization of the Terrorism Risk Insurance Act (TRIA), which is currently set to expire at the end of 2020. Nearly 350 companies and organizations signed the letter including the National Association of REALTORS. (Coalition Letter )
- TRIA was originally enacted in 2002 in response to the inability of insurance markets to predict, price and offer terrorism risk coverage to commercial policyholders. The law was extended in 2005, 2007 and again in 2015 – following a 12-day lapse when Congress failed to complete their work on reauthorization at the end of 2014.
- The coalition letter notes, “The American business community remembers all too well the twelve-day lapse in the program in early 2015 and the disruption that lapse played in a variety of markets. We urge Congress to help provide much needed certainty by passing a long-term reauthorization of this important program without delay.”
- The coalition emphasizes that TRIA has served as a vital public-private risk sharing mechanism, ensuring that private terrorism risk insurance coverage remains available to commercial businesses, educational institutions and non-profit organizations at virtually no cost to the taxpayer.
- According to a 2019 Marsh study, the education, media, financial institutions, real estate, hospitality and gaming, and health care sectors had the highest ‘take-up’ rates among the 17 industry segments surveyed – all above 70%.
- Additionally, a 2018 Treasury Department report stated that “the Program has made terrorism risk insurance available and affordable in the United States, and the market for terrorism risk insurance has been relatively stable for the past decade.”
- The letter emphasizes, “The undersigned organizations urge Congress to promptly enact a ‘clean’ long-term extension of this vital program. Making changes to the TRIA mechanism to increase insurer retentions could affect the ability of many insurers, particularly smaller and mid-sized companies, to write risks or markets altogether, which ultimately impacts the ability of policyholders to secure adequate coverage.
BOTTOM LINE – WHY DOES THIS MATTER? Absent TRIA, there is not sufficient insurance and reinsurance capital available to provide comprehensive terrorism coverage to U.S. insurance buyers,” the coalition states. (Reinsurance News, Sept. 17)