The National Association of Mutual Insurance Companies (NAMIC) has called on Congress to quickly approve a long-term extension of the Terrorism Risk Insurance Act (TRIA), warning that failure to do so could disrupt construction projects and hinder economic development nationwide.
Elizabeth Heck, chair, president, and CEO of Greater New York Insurance Companies and former NAMIC chair, spoke before the House Financial Services Subcommittee on Housing and Insurance on September 17. She outlined the importance of TRIA, noting its role in supporting the insurance market without burdening taxpayers.
“Unlike natural disasters, terrorism has a human aspect that is adaptive and unpredictable,” Heck said. “Wildfires do not change their paths to get around protective measures, tornadoes do not aim for population centers, and hurricanes do not change paths to target the most vulnerable communities. Terrorists can and will adapt to find vulnerabilities to maximize damage and casualties.”
TRIA was enacted in 2002 after lenders began requiring terrorism coverage that insurers were unable to provide at the time. Under the program, insurers must keep terrorism coverage affordable. In exchange, they are allowed to spread a portion of losses from terrorist attacks over several years. The federal government provides initial funding for a percentage of losses once companies have paid a deductible; this funding is later repaid by insurers with interest.
“TRIA allows insurers a degree of certainty, which has enabled companies of all sizes to offer coverage, making for a competitive market and affordable premiums,” Heck stated. “Thankfully, the program has yet to be tested and as we look back nearly 25 years after the attacks, it is important to recognize how much construction and economic development TRIA has supported, all at no cost to the taxpayers,” she added.
