Insurance Organizations Press Congress to Act on TRIA Reauthorization

Several insurance industry organizations have approached Congress to urge the reauthorization of the Terrorism Risk Insurance Act (TRIA) federal terrorism insurance backstop.

During a hearing of the US House Financial Services Subcommittee on Housing and Insurance on September 17, Andrew N. Mais, Connecticut insurance commissioner and past president of the National Association of Insurance Commissioners, highlighted TRIA's importance in ensuring that insurers can provide affordable terrorism coverage.

Mr. Mais called for a long-term TRIA reauthorization of 7 to 10 years. The federal terrorism backstop is currently set to expire at the end of 2027, and Mr. Mais commended the subcommittee for addressing the issue well before the measure's scheduled expiration.

"Your forethought is both appreciated and necessary, as insurance and reinsurance contracts and decisions to deploy capital are made months, if not years, in advance," Mr. Mais said. "Furthermore, business decisions that depend on access to commercial insurance, from deciding to break ground on a commercial space to starting a new business or building more housing, are often years in the making, so understanding that insurance will be available is critical to supporting the continued growth of our communities and the economy."

In the absence of TRIA or a similar mechanism, it's unlikely that private insurance companies would provide meaningful commercial terrorism insurance capacity, Mr. Mais told the subcommittee.

Representing the insurance industry, Elizabeth Heck, president and chief executive officer of Greater New York Insurance Companies and former chair of the National Association of Mutual Insurance Companies, suggested that long-term TRIA reauthorization could prevent the disruption of construction projects and protect economic development across the United States.

"Unlike natural disasters, terrorism has a human aspect that is adaptive and unpredictable," Ms. Heck told the subcommittee. "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 allows insurers a degree of certainty, which has enabled companies of all sizes to offer coverage, making for a competitive market and affordable premiums," Ms. Heck said.

The American Property Casualty Insurance Association (APCIA) also submitted a statement for the record reaffirming its support for the immediate reauthorization of the TRIA program.

"TRIA is a fiscally sound program that has operated for 23 years with minimal cost to taxpayers," the APCIA said in a statement attributed to Sam Whitfield, the organization's senior vice president of federal government relations. "Its continued existence is vital to maintaining confidence in the marketplace and ensuring the availability of terrorism coverage that businesses and communities rely on."

The APCIA called on Congress to reauthorize the current TRIA program before 2027 and without changes to its financial thresholds.

"A long-term extension will empower insurers of all sizes to deploy private sector capital, foster competition, and sustain the availability of terrorism risk coverage that supports America's economic engine," Mr. Whitfield said.