In a joint letter to Michael G. Oxley, (R-Ohio), Chairman of the House Committee on Financial Services, and Richard C. Shelby (R-Ala.), Chairman of the Senate Banking Committee, six of the most prominent U.S. insurance associations urged that the Terrorism Risk Insurance Act (TRIA) be renewed.
The letter from the American Insurance Association, The Council of Insurance Agents and Brokers, Independent Insurance Agents and Brokers of America, Property Casualty Insurers Association of America, Reinsurance Association of America and UWC – Strategic Services on Unemployment & Workers’ Compensation urged the two Congressional leaders to act this year to reauthorize TRIA.
The associations stressed that the act “provides a federal backstop to the property-casualty insurance system in the event of a major attack by foreign terrorists against a U.S. target. This public-private partnership is working to stabilize the commercial insurance markets that underpin our entrepreneurial, free-market economy. As a result of TRIA, terrorism insurance has been made available to all types of commercial insureds, including those located in high-risk areas.”
The letters said that while TRIA was originally conceived as a three year program – it’s due to expire at the end of December 2005 – it should be continued as “America remains under the constant and very real threat of further catastrophic terrorist attacks, catastrophic terrorism remains an uninsurable risk.”
The letter also noted the “strong consensus throughout the insurance industry, and the policyholder community we serve, that extension of the federal backstop (either the current TRIA or a modified program) is necessary for the stability of the insurance market and the protection of the public, because the insurance industry does not have the financial capacity to insure against terrorism without a federal backstop.”
It urged Congress to act to extend TRIA well before it actually expires, in order to have the time “to provide the certainty that is necessary to insurers and policyholders alike as they contemplate multi-year business transactions and financial commitments.” It also noted that “State insurance regulators understand this reality and are urging Congress to quickly take up the issue of continuing a federal terrorism risk insurance backstop beyond TRIA’s sunset date.”
Both letters to the congressional leaders closed by adding that the organizations who signed them are “are committed to working with you, state insurance regulators, and our policyholders in meeting this challenge. While recognizing the enormous challenges that exist with respect to insuring against terrorism, we also remain committed to improving homeland security and facilitating the future development of private market solutions.”
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