Absent the Terrorism Risk Insurance Act (TRIA), another terrorist attack along the lines of Sept. 11 could cost U.S. taxpayers as much as $7 billion to cover uninsured losses, according to a study released April 10 by the RAND Corporation.
Meanwhile, a bipartisan group of senators announced a deal on legislation to extend TRIA beyond its current expiration date at the end of 2014. Sens. Charles Schumer (D-NY), Dean Heller (R-NV), Mark Kirk (R-IL) and Jack Reed (D-RI) said April 10 that they had reach an agreement on a bill that would extend the program until 2021.
“Redevelopment and economic growth should be encouraged in New York and other high-risk areas across the country, even in the face of unfathomable terrorist events, and I will work with my colleagues to get TRIA passed this year to preserve this essential tool,” Schumer said.
Advocates for the bill’s extension cited the RAND study as evidence of the need for its extension.
“The RAND study further demonstrates that terrorism risk insurance is an indispensable economic backstop that protects taxpayers and the American economy,” said Marty DePoy, spokesperson for the Coalition to Insure Against Terrorism (CIAT). “Congress must work quickly to reauthorize TRIA.”
CIAT represents a wide range of businesses and other organizations throughout the real estate, manufacturing, utility, construction, transportation, entertainment and retail sectors. NAREIT is a member of the group.
RAND found that eliminating TRIA would not only limit terrorism risk insurance options in the marketplace, but result in higher prices as well. Insurers and reinsurers paid out more than $30 billion in claims following the Sept. 11 attacks. Prior to the enactment of TRIA in 2002, a significant share of insurance providers opted against continuing to offer terrorism insurance. Terrorism risk insurance became more widely available once TRIA was signed into law, and the legislation was reauthorized in 2005 and 2007.
RAND is in the middle of conducting a series of analyses on the impact of TRIA. Last month, the non-profit policy research and analysis firm released a report indicating that TRIA enhances national security by ensuring that terrorism coverage is both available and affordable. Forthcoming research will look into the effect of TRIA on the Workers’ Compensation insurance marketplace.