2013-09-19 16:18:03 -
TRIA Enables a Stable Terrorism Risk Insurance Market
WASHINGTON, D.C., September 19, 2013 - Leigh Ann Pusey, president and CEO of the
American Insurance Association (AIA), issued the following statement regarding
today's U.S. House Financial Services Committee hearing "The Terrorism Risk
Insurance Act of 2002."
TRIA was first authorized in 2002 following the terrorist attacks of September
11, 2001. It was subsequently reauthorized in 2005 and 2007 with broad
bipartisan support, and is scheduled to expire on December 31, 2014. Three TRIA
reauthorization bills, H.R. 508, H.R. 1945 and H.R. 2146, have been introduced
in the U.S. House of Representatives.
Ms. Pusey's statement follows:
"Terrorism is a unique risk that remains uninsurable without the successful
partnership provided by TRIA. The program provides the necessary stability and
certainty to prevent economic disruption while providing
for an orderly recovery
following an event. It is due to TRIA that terrorism risk insurance is widely
"TRIA enables insurers to cover this intentional man-made risk that defies
predictability. Unlike natural catastrophes, where the industry can leverage
scientific information dating back hundreds of years, only the government has
access to the critical information insurers would need to underwrite this unique
risk. There is simply no way for insurers to gauge the frequency, location and
means used to carry out terrorist attacks, which are intentional events largely
controlled by the terrorists themselves. Similarly, because terrorism is a
dynamic and interdependent risk, the benefits of individual mitigation efforts
"While AIA welcomes the debate on whether TRIA is the best long-term solution
for managing terrorism exposure, its first 11 years have been highly successful.
Rather than 'crowding out' private market capacity, TRIA's public-private
partnership, which requires insurers to offer terrorism coverage, has actually
enabled commercial insurers to become more comfortable with individually
managing terrorism exposures without compromising financial solvency.
"TRIA protects more than just policyholders, it protects taxpayers too. The
program requires insurers to meet significant deductibles and includes a
mandatory recoupment provision for any federal dollars expended on losses up to
$27.5 billion. In addition, insurers are required to absorb 15 cents of every
additional dollar of insured losses beyond their individual deductibles up to
the program's $100 billion cap. Thankfully, there has not been a need to invoke
the TRIA program in the years since it was created. Therefore, the cost to
taxpayers has been negligible-administrative staffing only.
"AIA will be working in the months ahead to achieve broad bipartisan support for
reauthorization of this vital program. Our organization and members believe that
failure to renew TRIA could lead to significant economic disruption at a time
when our country can least afford it."
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Source: American Insurance Association via Thomson Reuters ONE