WASHINGTON, DC, February 6—The Coalition to Insure Against Terrorism (CIAT), a broad-based group of business insurance consumers, strongly endorsed bipartisan legislation introduced by Rep. Michael Grimm (R-NY) and nine co-sponsors, H.R. 508, which would extend the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA). The legislation currently is scheduled to sunset at the end of 2014, and H.R. 508 would extend it for five years.
TRIPRA and its predecessor legislation passed in the wake of the 9/11 terror attacks provide a federal reinsurance public-private risk sharing mechanism without which private terrorism risk insurance coverage would not be commercially available – as was the case following 9/11. The absence of terrorism risk insurance would cripple the still-recovering real estate economy, disrupt construction and likely produce job losses in number equal to or greater than those that resulted from 9/11.
In a recent letter to Rep. Grimm, CIAT noted, “The current federal terrorism risk insurance program has been a tremendous success. At almost no cost to the taxpayer, the national terrorism insurance program has made it possible for more than a decade for businesses to purchase terrorism risk coverage. TRIPRA, has helped keep the economy going in the face of continued terrorist threats by allowing businesses across America to secure this commercially necessary product, saving countless jobs in the process. It has stabilized the terrorism insurance marketplace and restored insurance capacity to an enormous portion of the U.S. economy, thereby ensuring economic continuity critical to the nation’s overall security.”
CIAT pointed out that TRIPRA provides a high degree of insulation to taxpayers since the law requires that private insurer capital and a retrospective assessment on commercial policyholders, such as CIAT’s members, be used to pay losses on the scale of 9/11 insured losses before any taxpayer resources are used.
CIAT also noted that studies by the Government Accountability Office (GAO), the President’s Working Group on Financial Markets and other terrorism risk observers have consistently concluded that acts of terrorism are uninsurable risks. Because a viable private sector marketplace for this coverage does not yet exist, TRIPRA’s expiration would leave policyholders and taxpayers exposed and unprotected – just as they were after 9/11.
