The Terrorism Risk Insurance Act’s (TRIA) hard end date of Dec. 31 poses a huge problem for commercial insurance policies taking effect on or after Jan.1, 2005, as the end of the typical one-year policy will extend beyond the sunset date, according to the National Assocation of Mutual Insurance Companies (NAMIC).
“This period over the next few months is critical. An absence of the TRIA reinsurance backstop will cause major uncertainty – this is bad for business and bad for our economic recovery,” said NAMIC Federal Affairs Senior Vice President, David A. Winston.
“This legislation is a must-pass measure this year in order to prevent economic uncertainty that would occur without the federal reinsurance backstop provided by TRIA,” Winston continued. “It is essential that TRIA be extended for two years, thus assuring that the federal backstop will be in place for insurance contracts now being negotiated to take effect on or after Jan. 1, 2005. Without a TRIA extension, the federal backstop would end for such contracts on Dec. 31, 2005, the scheduled sunset of TRIA.”
H.R. 4634, the Terrorism Insurance Backstop Extension Act of 2004, was introduced by Rep. Pete Sessions, R-Texas, along with Rep. Eric Cantor, R-Va., Rep. Richard Baker, R-La., and Rep. Sue Kelly R-NY. H .R. 4772, the Terrorism Risk Insurance Program Extension Act was introduced by Rep. Michael Capuano, D-Mass., along with Rep. Steve Israel, D-N.Y., Rep. Barney Frank, D-Mass., Rep. Paul Kanjorski, D-Pa., Rep. Martin Frost, D-Texas, Rep. Darlene Hooley, D-Ore., and Rep. Dennis Moore, D-Kan. among others.
The Senate counterpart, S.2764, the Terrorism Risk Insurance Extension Act of 2004, was introduced by Sens. Christopher Dodd, D-Conn., Chuck Schumer, D-N.Y., Jack Reed, D-R.I., Chuck Hagel, R-Neb., Elizabeth Dole, R-N.C., Jim Bunning, R-Ky., Mike Crapo, R-Idaho, Lincoln Chafee, D-R.I., Harry Reid, D-Nev., and Ben Nelson, D-Neb.
“The terrorism threat facing this nation post 9/11 remains real as our country continues under an elevated terrorism alert. The fact remains that the United States Government has made significant progress to strengthen our security, but it cannot guarantee that another terrorist attack will not occur,” said Winston.
“If the Government cannot give us that assurance, it is unrealistic to expect the nation’s commercial insurers to undertake this risk—and face potential financial ruin. TRIA has, for the most part, enabled terrorism coverage to be available at reasonable prices and the take-up rates have improved since its enactment,” he said.
“NAMIC strongly supports legislation to extend TRIA beyond 2005. This is one of our top priorities for the post-election “lame duck” session, scheduled to begin mid-November. In the meantime, we will continue to press our case in Congress as well as energize NAMIC’s grassroots base,” concluded Winston.