The ABA is urging Congress and the Obama administration to support reauthorization during the current lame duck session of the Terrorism Risk Insurance Act (TRIA), which ensures the availability of terrorism insurance for U.S businesses by providing federal financial assistance.
TRIA was originally enacted in 2002 as a temporary program after insurers and reinsurers began excluding terrorism risk from insurance coverage following the terrorist attacks of Sept. 11, 2001. The program requires that commercial property and casualty insurers offer to include terrorism coverage in the policies they are selling but does not require the insured parties to purchase the coverage.
For a terrorism loss to be covered by the program, the loss must exceed $5 million and be certified by the Treasury Department, and insurance industry losses from a terrorism event must exceed $100 million. Congress reauthorized the program in 2005 and in 2007, when it extended the program through 2014 and expanded it to include domestic terrorism.
In Nov. 14 letters to House Majority Leader John Boehner (R-Ohio), Treasury Secretary Jacob J. Lew and Homeland Security Secretary Jeh Johnson, ABA Governmental Affairs Director Thomas M. Susman attached an in-depth analysis of the program by the ABA Tort Trial & Insurance Practice Section (TIPS) and emphasized the urgent need to reauthorize the program this year.
According to the analysis provided by TIPS Chair Michael W. Drumke, TRIA has been “enormously successful in helping protect property owners from the risk of terror attacks.”
“Although the U.S. has been fortunate that it has not been subject to any major terrorist events since the September 11th attacks, the nature of terrorism risk is still highly unpredictable and potentially catastrophic,” the analysis stated.
“The historical evidence, current actions of insurers, and the evidence from other countries shows that the market operating without any government support will provide low levels of terrorism insurance coverage, if any, at much higher cost,” the analysis stated.
The Senate overwhelmingly passed a TRIA reauthorization bill in July, and similar House legislation is pending on the House calendar. Both bills would revise requirements for the program. S. 2244, sponsored by Sen. Charles Schumer (D-N.Y.), would extend TRIA through the end of 2021, while H.R. 4871, sponsored by Rep. Randy Neugebauer (R-Texas), would reauthorize the program through 2019.