Buyers and insurers dismayed by TRIA expiration

TRIA is the US federal terrorism insurance backstop that was introduced in 2002 following the 9/11 attacks to stabilise the terrorism insurance market. It was renewed in 2005 and 2007 and was expected to be reauthorised again this week via the Terrorism Risk Insurance Protection Reauthorization Act (TRIPRA). However, despite the House of Representatives approving a bill that would extend TRIA for six years, the Senate failed to reach an agreement before Congress adjourned for the year. TRIA will now expire on 1 January, 2015 and potentially leaves business uninsured against terrorism risk.hideThe expiration of TRIA at the turn of the year throws into doubt the level of protection companies now have from policies renewing on 1 January. Experts say that many of these policies state that terrorism risk would be excluded from cover if TRIA is not renewed. The US insurance buyers' association RIMS said the decision not to renew TRIA is 'shortsighted' and has resulted in the 'worst possible outcome'. It says expiration of TRIA will cause terrorism insurance rates to rise and force some companies to go without protection. RIMS said that TRIA has proven successful and allowed the market place to provide adequate capacity at affordable rates. This is now under threat, it says. RIMS president Carolyn Snow said: "We are extremely disappointed that Congress failed to pass an extension of TRIA, despite strong bipartisan support. The programme's expiration will have many negative repercussions for commercial insurance consumers, the countless organisations they represent and the US economy as a whole. "Its expiration will almost certainly cause rates to rise, placing many lending agreements in jeopardy and forcing some organisations to self-insure or simply go without," warned Ms Snow. "RIMS and many other organisations have been pushing Congress to pass an extension for the past two years but Congress senselessly ignored those concerns and waited until the very last moment. This delay has ultimately led to the worst possible outcome. The longer this lapse in coverage is allowed to continue, the more the US economy will suffer," she added. RIMS and insurance industry associations have urged both the House and the Senate to treat the reauthorisation of TRIA as a priority when they reconvene in early January. The Property Casualty Insurers Association of America (PCI) was equally vociferous in its criticism of Congress over failure to renew TRIA before it expires. "It is unconscionable that the US Senate would adjourn without finishing their job and reauthorising a long-term Terrorism Risk Insurance Act (TRIA) when the threat of a terrorist attack against the United States is at the highest level it has been in a decade," said its president and CEO David A Sampson. "TRIA plays a vital role in our national economic security. If a massive attack occurs before TRIA is reauthorised, there could be no terrorism insurance coverage or taxpayer protection. PCI is profoundly disappointed by the dysfunction in Washington and we urge the next Congress to address a long-term reauthorisation of TRIA immediately when they convene in January," he added. The American Insurance Association (AIA) said it is 'incredibly disappointed' by the Senate's failure to pass the House-approved TRIA reauthorisation bill. Congress has 'failed to protect' taxpayers and the economy, it said. The move will 'significantly jeopardise' the US terrorism insurance market, added the AIA. "We strongly urge the new Congress to take up the House-Senate negotiated TRIA reauthorisation provisions as its first item of business when it returns in January in order to minimise marketplace disruptions. A failure to quickly reauthorise TRIA would be a failure to protect our economy from terrorism," said the AIA.

Buyers and insurers dismayed by TRIA expiration

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