Terror incidents in the US have been thankfully few since the tragic events of September 11th. But the attack in Boston looks set to reignite the debate over the reinstatement of TRIPRA.
With 12 years having passed since 9/11, some commentators were predicting an end to the Terrorism Risk Insurance Programme Reauthorisation Act (TRIPRA), due to be considered for extension by Congress beyond 2014. Following events in Boston however, the “debate over its future is likely to get a lot more interesting”, says Ben Walter, CEO of Hiscox USA.
Speaking with Bermuda:Re, Walter said that events in Boston could have significant implications for the ongoing debate concerning the extension of TRIPRA, but added that “Congress remains a difficult animal to predict”.
“You need to consider closely the political overlay to this debate”, said Walter, a debate that draws upon issues such as small government versus big government and the political demographics of those cities exposed to terror risk. “The politics of any decision is going to be particularly complex”.
“A stand-off on the Hill could still be possible”—even in spite of events in Boston—one that could potentially signal the end of TRIPRA. “It won’t take a ‘no’ vote to kill the bill”—something that would likely be viewed as distasteful following events in Massachusetts—“but if Congress does nothing to reauthorise the bill, it simply goes away. And with intransigence a feature of Congress at present, no action is a possible outcome”.
Walter said that if TRIPRA is not extended, it could herald dramatic changes to the terrorism insurance market. Much will depend upon Congress. The industry will undoubtedly be watching events unfold with interest.
Addressing whether the private market would welcome a drawing back of TRIPRA, Walter said that due to the unpredictable nature of terrorism and the impossibility of modelling such threats with any degree of certainty, a government backstop would likely remain a welcome addition to the private market.
Touching upon the implications of the Boston attacks on insurance pricing and demand, Walter said that its impact would likely be limited. “It might perk up demand for terrorism coverage in less prominent target cities such as Atlanta, Boston, Chicago and Houston, but its effects will likely be only a ripple in buying behaviour”.
Boston, TRIPRA, terrorism, insurance, Congress, Hiscox