NAMIC Urges Swift, Long-term Extension for Terrorism Risk Program

Congress can prevent disruption of construction projects and protect economic development across the country by swiftly passing a long-term reauthorization of the Terrorism Risk Insurance Act, the National Association of Insurance Companies told lawmakers today.

Elizabeth Heck, chair, president, and CEO of Greater New York Insurance Companies and former NAMIC chair, represented the industry at a House Financial Services Subcommittee on Housing and Insurance Sept. 17, explaining how the TRIA program has served the nation at no cost to taxpayers, and why the continued threat of terrorism makes the program necessary.

“Unlike natural disasters, terrorism has a human aspect that is adaptive and unpredictable,” she said. “Wildfires do not change their paths to get around protective measures, tornadoes do not aim for population centers, and hurricanes do not change paths to target the most vulnerable communities. Terrorists can and will adapt to find vulnerabilities to maximize damage and casualties.”

TRIA was passed in 2002 as lenders began requiring terrorism coverage the market could not provide. Insurers in the program are required to keep terrorism coverage affordable, and in turn companies would be able to spread a percentage of their losses from a terrorist attack over several years. The federal government would provide up-front funding for a percentage of losses after companies paid a deductible, and that funding would be repaid by insurers with interest.

“TRIA allows insurers a degree of certainty, which has enabled companies of all sizes to offer coverage, making for a competitive market and affordable premiums,” Heck said. “Thankfully, the program has yet to be tested and as we look back nearly 25 years after the attacks, it is important to recognize how much construction and economic development TRIA has supported, all at no cost to the taxpayers,”