AIA: Senate Bill Boosts Momentum to Extend Terrorism Insurance Law

The introduction of legislation in the Senate on Thursday to extend the Terrorism Risk Insurance Act of 2002 (TRIA) by two years “adds to the momentum for congressional action in 2004, and demonstrates bipartisan support for maintaining TRIA’s critical economic safety net,” Leigh Ann Pusey, senior vice president of government affairs for the American Insurance Association (AIA), remarked.

The legislation, authored by Senators Robert Bennett (R-Utah) and Christopher Dodd (D-Conn.), would extend TRIA for two years beyond the program’s current Dec. 31, 2005, expiration date. Two bills pending in the House also would extend TRIA for two years, although those bills differ on some details.

“It is critical that Congress act this year to extend TRIA. The leadership of these two widely respected senators gives that effort important momentum,” Pusey said. “We applaud Senators Dodd and Bennett for their continuing leadership on this issue – first, following the 9/11 attack when hundreds of thousands of jobs depended upon enacting TRIA, and again now, when our nation’s economy safety net is in danger of coming apart.”

TRIA secures virtually every sector of the U.S. economy against catastrophic terrorist attacks by making sure that businesses of all sizes and types can purchase commercial insurance to cover losses resulting from terrorist attacks. The three-year, public-private risk sharing mechanism has reportedly worked well, enabling the commercial insurance marketplace to function even though the threat of catastrophic terrorism remains.

However, insurance consumers, regulators and insurance companies are reportedly pushing for congressional action this year to extend TRIA.

“The main reason to extend TRIA is that annual insurance policies written in 2005 – which are negotiated as early as this fall – will overlap TRIA’s expiration unless TRIA is extended. This overlap will cause tremendous market uncertainty and leave policyholders and insurers exposed to devastating financial consequences in the event of catastrophic terrorist attacks,” Pusey said. “In short, the economic stakes for American business and workers are simply too high for Congress not to act in 2004.”