Congress urged to pass long-term reauthorisation of TRIA

A group of US re/insurers, business organisations and insurance associations have written to Congress, urging it to work swiftly to pass a long-term reauthorisation of the Terrorism Risk Insurance Act (TRIA), which is currently set to expire at the end of 2020. The letter notes that since its initial enactment in 2002, the TRIA has served as a vital public-private risk-sharing mechanism, ensuring that private terrorism risk insurance coverage remains available to commercial businesses, educational institutions and non-profit organisations at virtually no cost to the taxpayer. It states that the TRIA fosters certainty in the marketplace and allows all of these interconnected elements of the economy to continue to move forward. “Absent TRIA, there is not sufficient insurance and reinsurance capital available to provide comprehensive terrorism coverage to US insurance buyers,” it says. The signatories to the letter include: Allianz Global Corporate & Specialty, American Property Casualty Insurance Association, Aon, AXA XL, Chubb, Gen Re, Liberty Mutual Insurance, Lloyd’s, Reinsurance Association of America, Swiss Re Americas, The Hartford, The Travelers Companies Inc. , US Chamber of Commerce, W. R. Berkley Corporation, and Zurich North America. They urge Congress to promptly enact a ‘clean’ long-term extension of the programme. “Previous reforms to the programme have minimised taxpayer exposure, making further reforms unnecessary. In fact, the key ‘dials’ are already effectively indexed to premium growth at both the company and industry level, and the federal share will continue to decrease in future years even if Congress makes no changes to the programme beyond a simple change of the expiration date,” the letter states. It adds that making changes to the TRIA mechanism to increase insurer retentions could affect the ability of many insurers, particularly smaller and mid-sized companies, to write risks or markets altogether, which ultimately impacts the ability of policyholders to secure adequate coverage. “Maintaining a workable federal terrorism insurance mechanism is vital for our nation’s economic security and, without adequate coverage, our ability to mitigate further economic fallout in the event of an attack would be greatly impaired. There is no homeland security without economic security,” the letter warns. One of the signatories, Frank Nutter, president of the Reinsurance Association of America, said, “We view a clean extension of TRIA as straightforward and common sense, since previous reforms to the programme have minimised taxpayer exposure. The programme is intended to provide an insurance mechanism that is vital for our nation’s economic security and it does so. TRIA works well to fill the vacuum in (re)insurance capacity for acts of terrorism, keeps premiums paid by policyholders at affordable levels, provides insurance coverage to support economic activity, and minimises the need for public disaster assistance should there be future terrorist acts in the US. This programme is a win for the business community and for US taxpayers, and it should be reauthorised.”

Congress urged to pass long-term reauthorisation of TRIA

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