News from the GCVCC and US Chamber of Commerce
Washington, DC: The GCVCC supported a coalition letter urging Congress to reauthorize the Terrorism Risk Insurance Act (TRIA). The letter, which was signed by more than 300 organizations across the country, was delivered to Congress September 17, 2019..
September 17, 2019
TO THE MEMBERS OF THE UNITED STATES CONGRESS:
The undersigned organizations, representing a wide variety of business interests, urge Congress to work swiftly to pass a long-term reauthorization of the Terrorism Risk Insurance Act (TRIA) which is currently set to expire at the end of 2020.
The tragic terrorist attacks on September 11, 2001, fundamentally changed the landscape for insuring against the risk of terrorism in the United States. Struck with an inability to model frequency, location, and the potentially devastating scale of modern terrorism, insurers were forced to pull out of the marketplace, and in the months following the attacks, the inability of insurance policyholders to secure terrorism risk insurance contributed to a paralysis in the economy, especially in the construction, travel and tourism, and real estate finance sectors.
Since its initial enactment in 2002, TRIA has served as a vital public-private risk sharing mechanism, ensuring that private terrorism risk insurance coverage remains available to commercial businesses, educational institutions and non-profit organizations at virtually no cost to the taxpayer. According to a 2019 Marsh study, the education, media, financial institutions, real estate, hospitality and gaming, and health care sectors had the highest ‘take-up’ rates among the 17 industry segments surveyed – all above 70%. TRIA fosters certainty in the marketplace and allows all of these interconnected elements of the economy to continue to move forward.
In 2018, the Treasury Department reported that “the Program has made terrorism risk insurance available and affordable in the United States, and the market for terrorism risk insurance has been relatively stable for the past decade.” Absent TRIA, there is not sufficient insurance and reinsurance capital available to provide comprehensive terrorism coverage to U.S. insurance buyers.
To this end, the undersigned organizations urge Congress to promptly enact a “clean” long-term extension of this vital program. Previous reforms to the program have minimized taxpayer exposure making further reforms unnecessary. In fact, the key “dials” are already effectively indexed to premium growth at both the company and industry level, and the federal share will continue to decrease in future years even if Congress makes no changes to the program beyond a simple change of the expiration date.
Making changes to the TRIA mechanism to increase insurer retentions could affect the ability of many insurers, particularly smaller and mid-sized companies, to write risks or markets altogether, which ultimately impacts the ability of policyholders to secure adequate coverage. Maintaining a workable federal terrorism insurance mechanism is vital for our nation’s economic security, and without adequate coverage, our ability to mitigate further economic fallout in the event of an attack would be greatly impaired. There is no homeland security without economic security.
The American business community remembers all too well the twelve-day lapse in the program in early 2015 and the disruption that lapse played in a variety of markets. We urge Congress to help provide much needed certainty by passing a long-term reauthorization of this important program without delay.
Full Copy of Letter can be found here: 190917_Coalition_TerrorismRiskInsuranceAct_U.S. Congress