Post written by: Craig Corbin
Last year, we brought you the latest on the Terrorism Risk Insurance Act (TRIA), highlighting discussion associated with its upcoming expiration. The act was previously set to expire in 2005 and 2007, but has been successfully given additional legs through legislative extensions. At year’s end we will be coming up on another opportunity for extension.
Without additional support, the federal terrorism insurance program is scheduled to expire on December 31, 2014, leaving industry representatives in a scramble to tighten language for needed change among the following challenges:
- Crowded agendas and varied priorities in Congress.
- Deductible increase for companies impacted by catastrophic attacks.
- Concern that the House will not act fast enough to support a Senate bill on the topic.
- Co-pay issues associated with increases up to 20 percent, resulting from TRIA stipulations for additional terrorism coverage required that well beyond normal loss tolerance.
Against challenges, proponents of the bill recognize that the bill works well, is low cost to many tax payers, and its make-up helps protect a number of industries in case of harmful nuclear, biological, chemical, or radiological attack.
Renewal Requested: Business and Insurance Community Call for Action
In the last year, we have seen the business and insurance community begin to agree about the urgency of TRIA renewal. The insurance industry trade groups like the Property Casualty Insurers Association (PCI), the Risk & Insurance Management Society (RIMS) and even government groups like the National Association of Insurance Commissioners (NAIC) have been loyal supporters of TRIA renewal.
Even though the industry has serious concerns about the Patient Protection and Affordable Care Act, and National Flood Insurance (NFIP) reform, for example, TRIA renewal is the number one priority for 2014 for many, according to contributors to a RIMS study of legislative initiatives.
Additional Support Gathered with Positive Consequence in Sight
Now others are joining insurance industry supporters. A report recently released by the independent researcher, RAND Corporation, “National Security Perspectives on Terrorism Risk Insurance in the United States,” says because the availability of TRIA does increase the “take up rate” for terrorism insurance the government program has a beneficial effect on national security.
Reasonably priced, available terrorism coverage allows for several positive economic conditions that can be very helpful if our country experiences more large-scale attacks. The ability for businesses and properties to rebound and recover from such losses would be essential to address further security threats.
Large property owners are also voicing support through their own groups like the National Association of Real Estate Investment Trusts (NAREIT) and financial markets have concerns about the validity of notes and loans that rely on and require terrorism coverage.
Future in the Hands of Federal Legislators
As our federal legislators convene and feel the forces generated by lobbyists, we in commercial insurance should at least hope for a resolution to the TRIA expiration or renewal to come before the last minute.
January 2015 renewals will be issued sooner than we think.
What is your take on the legislation? Are you for or against an extension? Share your thoughts in the comment section below!
Image Source: Tony Brooks under Creative Commons Attribution 2.0 Generic