US Representatives Grimm and Maloney have introduced a bill into the US House of Representatives to extend the Terrorism Risk Insurance Act (TRIA) for a further five years.
The Act, which was due to expire on December 31 2013, was first introduced following the tragic events of September 11th. Should the bill be renewed, the government back-stop will be in place until 2019.
Under the Act, the federal government shares in any insurer’s losses when aggregate insured industry losses from terrorism exceed $100 million. Insurer deductibles are 20 percent of TRIA-coverage premiums, with the federal government agreeing to cover 85 percent of losses above the deductible, up to a limit of $100 billion.
Concerns behind the call for an extension of TRIA are two-fold. As Representative Grimm made clear: “New York City remains the number one terror target in the country, which is why it is imperative to be prepared should we face another tragic attack. TRIA establishes a critical public-private partnership whereby the federal government creates a backstop for private insurers on terrorism related losses. If TRIA expires, not only will we expose our nation to great financial risk, we could see the availability of terrorism insurance diminish.”
If TRIA were to lapse at the end of 2014, billions in commercial loans that are required to have terrorism insurance would be in technical default and could be called in, creating massive financial and economic disruption in the US.
US, US House of Representatives, terrorism, government backstop