The loss management plan created under the Terrorism Risk Insurance Act remains a vital part of our national economic security and Congress should act swiftly to reauthorize the program, the National Association of Mutual Insurance Companies said today.
“The marketplace for terrorism coverage as it exists today is due entirely to the existence of TRIA,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “Terrorism is a unique risk that defies normal underwriting, and if the program is allowed to expire or is significantly altered, the needed coverage would be either unavailable or unaffordable. As mutual companies, our members’ first duty is to ensure a stable, financially sound company for their policyholders. They cannot simply bet the company in order to cover potentially catastrophic losses that cannot be adequately underwritten.”
Terrorism, Grande noted, differs from normal major risks, such as hurricanes or tornadoes, in the human element – for example, adaptation to mitigation efforts. “Unlike terrorists, hurricanes and tornadoes do not seek out weak and vulnerable places to strike,” Grande explained. “Additionally, because terrorism is a matter of national security, much of the information an insurer would need to even attempt to underwrite terrorism coverage is rightly kept classified by law enforcement and defense agencies.”
Originally enacted in 2002, TRIA requires property/casualty insurers to make terrorism coverage available, but limits total exposure in the event of a truly catastrophic attack. The program was created in response to the lingering economic damage from the 9/11 terrorist attacks.
“Ultimately, TRIA is not meant to protect insurers, but to make sure that the economy can recover in as orderly a fashion as possible from a terrorist attack,” Grande said. “The tragic events of 9/11 led to the realization that terrorism is a real threat to the economy. In the wake of the attacks, lenders began requiring coverage that, prior to TRIA, insurers could not provide. The result was economic development grinding to a halt and the loss of tens of thousands of jobs.”
The program has been reauthorized twice in the past decade, and is currently set to expire at the end of 2014.
“In 2002, we hoped that terrorism was a temporary threat,” Grande said. “Unfortunately, more than ten years later, we know better. The threat of terrorism remains, and it has not diminished. TRIA is an important part of our defense against terrorism and it should be swiftly reauthorized.”
Director, Federal Public Affairs
Posted: Tuesday, September 24, 2013 4:22:07 PM. Modified: Wednesday, September 25, 2013 8:59:12 AM.
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