Advisen

Congress passes seven-year extension of TRIA

By Erin Ayers, Advisen

The United States Senate and House of Representatives have passed a bill that extends the Terrorism Risk Insurance Act (TRIA) for an additional seven years this week, along with a provision that calls for a study of cyber terrorism risks.

U.S. lawmakers originally enacted TRIA in 2002 in response to the Sept. 11 terrorist attacks. It has been renewed three times since and was due to expire Dec. 31, 2020. The nation’s insurers, agents, and brokers strongly urged renewal to avoid disruption or uncertainty for many insurance policies that rely upon the federal reinsurance backstop.

“APCIA commends the overwhelming bipartisanship expressed in the House and Senate to get TRIA done this year. This is a great example of how Congress got their job done, on time, with the interest of the American people at the forefront. Because TRIA is critical to the stability of the nation’s economy, businesses of all sizes, and the insurance markets, Congress enacted the Program well before it was set to expire. This is a job well-done,” said Nat Wienecke, senior vice president of federal government relations at the American Property Casualty Insurance Association (APCIA).

Upon passage by the U.S. Senate and the House of Representatives of bills to renew TRIA, the Independent Insurance Agents & Brokers of America (IIABA) said, “There is still a very real need for the program, as the threat of terrorism is still ever-present, and the unique nature of this risk has not changed.”

No acts of terrorism have been certified for TRIA coverage throughout the lifetime of the program, but the insurance industry said it provides much-needed stability. A recent white paper from the Insurance Information Institute (III) examined the “incalculable risk” that would face insurers and their clients without TRIA. Absent the backstop, there appears to be “no appetite to offer full coverage” for terrorism risks, even from the international reinsurance market, III found. Without TRIA, rates – already on the rise due to a hardening market – would increase in high-risk areas, construction projects would be delayed, and coverage options could be limited.

A September 2019 report from Marsh on global terrorism risk insurance noted that without TRIA, insurers would need to seek additional reinsurance to meet capital requirements.

“Multiple carriers accessing the reinsurance market capacity simultaneously will impact pricing,” the broker explained.

In addition to a Government Accountability Office (GAO) study on cyber terrorism risks, the bill also calls for biennial reporting from the U.S. Treasury on disaggregated data relating to places of worship. The measure next goes to the White House for enactment.

Editor Erin Ayers can be reached at eayers@advisen.com.