The National Association of Mutual Insurance Companies called on lawmakers today to swiftly reauthorize the Terrorism Risk Insurance Act, in advance of a hearing on the issue by the House Financial Services Committee.
“For over a decade, the risk-sharing mechanism created by TRIA has ensured our national and economic security at virtually no cost to the taxpayers,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “The program has created space for a robust private market for terrorism insurance to form where it might not have otherwise. Allowing this program to expire or materially altering the trigger or deductibles would lead to higher costs for the insured and less coverage in the market, which increases the ultimate burden on taxpayers”
Enacted in 2002, the program requires property/casualty insurers to make terrorism coverage available, but limits total exposure in the event of a truly catastrophic attack. The TRIA program has been reauthorized twice in the past decade and is currently set to expire at the end of 2014.
“Insuring against a terrorist attack defies traditional underwriting principles. These are intentional acts perpetrated with the goal of maximizing death and destruction, which creates enormous challenges,” Grande said. “Terrorism risk is fundamentally not the same as natural catastrophe risk.”
Failing to reauthorize the program would have far-reaching effects, Grande noted, not the least of which would be making the American economy more vulnerable to terrorists. Even without an attack, Grande said, the absence of TRIA would have significant consequences across the economy and the nation.
“We saw after 9/11 what kind of damage to the economy is possible,” Grande said. “Many lenders require terrorism coverage, and without TRIA that financing would dry up, causing development projects to grind to a halt and costing thousands of jobs. This happened in the immediate aftermath of 9/11 and was one of the main reasons TRIA was created in the first place.”
NAMIC is submitting testimony for the record at the hearing and will continue to work with lawmakers on both sides of the aisle in the House and Senate to see the TRIA program swiftly reauthorized.
“In the end, the purpose of TRIA is not to protect insurers but to make sure that the economy can recover in as orderly a fashion as possible from a terrorist event,” Grande said. “The program should be reauthorized to encourage private-sector involvement in the terrorism insurance marketplace – and thereby protect and promote our nation’s finances, security, and economic strength.”
Director, Federal Public Affairs