Under the Terrorism Risk Insurance Program Reauthorization Act of 2015, the Secretary of the Treasury is required to submit a report regarding the Terrorism Risk Insurance Program to the Committee on Financial Services of the House of Representatives, and the Committee on Banking, Housing, and Urban Affairs of the Senate. The 2015 Reauthorization Act also…
The Report analyzes data that was collected this year by Treasury concerning the participation of insurers in the Terrorism Risk Insurance Program (TRIP). The Report concludes that TRIP, which provides a federal backstop for certain U.S. property and casualty insurance losses resulting from a certified act of terrorism, is an important mechanism in ensuring that terrorism risk insurance remains available and generally affordable in the United States.
CIAT is pleased to have the opportunity to comment in response to FIO’s NPRM. As the principal commercial buyers of terrorism insurance, CIAT members were instrumental in the development and enactment of the Terrorism Risk Insurance Act (“TRIA”), and remain the true consumer voice on the TRIA program. CIAT continues to believe that the TRIA program has been, and remains, extremely effective, and as a result we were actively engaged as the latest reauthorization legislation made its way through Congress in 2014-2015.
The Terrorism Risk Insurance Program Reauthorization Act of 2015 includes a provision for GAO to review how other countries have structured and funded their terrorism risk insurance programs. This report compares the structures of and the role of government in selected foreign terrorism insurance programs and examines the loss-sharing arrangements between the government and private sector.
CIAT continues to believe that the TRIP program has been, and remains, extremely effective in achieving its primary purpose, which was to stabilize the market following 9/11 and to ensure the continued availability of terrorism coverage for commercial policyholders in the future. As part of its economic national security, America needs a stable, reliable, and competitive terrorism insurance market so employers can invest in assets and create jobs without assuming the risk and liabilities of a terrorist attack. The TRIP program has been the key factor in ensuring that this market continues to exist.
The Terrorism Risk Insurance Program Reauthorization Act of 2015 (Reauthorization Act), which extended and amended certain provisions of TRIP, requires the Secretary to submit a report to Congress concerning, among other things, the overall effectiveness of TRIP. To assist the Secretary in formulating the report, FIO is seeking comment on the statutory factors that the report must analyze and other related matters.
Despite clear consensus in Congress that the Terrorism Risk Insurance Act (TRIA) must be reauthorized, the issue somehow remains in limbo. This has already hurt the economy: the TRIA Program works solely on the basis of private insurers’ willingness to write such insurance, and questions about the program’s future are destabilizing. A one year (or shorter) stop-gap extension of TRIA actually exacerbates the problem. Insurers and their business customers need greater certainty to function properly, especially where long-term financing is involved. Kicking the can down the road to next year will, experts agree, sacrifice economic growth.
The Senate has already passed legislation (S. 2244) reauthorizing TRIA with an overwhelmingly bipartisan vote. However, the House is currently at an impasse on how to proceed to pass its own reauthorization bill (H.R. 4871). Time is running out. The House MUST act quickly to resolve their differences so Congress can take final action to renew the program this fall. We encourage House lawmakers to complete work to pass a long-term extension now.
