When insurance firms launched social media initiatives, the results were rewarding.
The National Association of Mutual Insurance Companies welcomed the introduction of legislation to reauthorize the Terrorism Risk Insurance Act as a move toward maintaining the risk-sharing mechanism created under the law.
“With just months until the TRIA program expires, any sign of progress is a welcome one,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “The TRIA program is vital to protecting our economy from the threat of terrorism and to fostering growth during this slow economic recovery.”
Created in the wake of the Sept. 11, 2001, terrorist attacks, the TRIA program requires insurers to offer affordable coverage against acts of terrorism, but provides for upfront federal funds to help cover losses in the event of a catastrophic attack. Taxpayers are protected by a recoupment provision that reimburses the government over time at 133 percent.
“TRIA has allowed businesses and communities across the country to obtain coverage that would otherwise be unavailable,” Grande said. “Development ground to a halt in the wake of 9/11 as lenders demanded coverage insurers couldn’t provide, costing billions of dollars and tens of thousands of jobs. With TRIA in place, we now see more than 60 percent of businesses across the country purchasing terrorism coverage.”
Introduced by Rep. Randy Neugebauer, R-Texas, chairman of the Insurance and Housing Subcommittee, the bill would extend the TRIA program for five years, increase the insurer co-pay to 20 percent, and create a new program bifurcation for nuclear, biological, chemical, or radiological type of attacks. This legislation also increases the program’s trigger from $100 million to $500 million.
“There are significant differences between this bill and the legislation passed by the Senate Banking Committee, and NAMIC is eager to work with lawmakers to address our concerns during the legislative process,” Grande said. “The dramatic increase in the trigger is an unacceptable change in the program that will have a punitive impact on smaller, regional, and niche insurers and their policyholders. Increasing the program trigger does not accomplish any of the stated objectives of the TRIA program’s critics – namely, it does not reduce taxpayer exposure or shift more of the risk to the private sector. Rather it will serve to either concentrate risk or reduce overall take-up rates as smaller and medium-sized insurers are forced from the program.”
The Senate TRIA legislation extends the program for seven years, which would bring much greater certainty to the marketplace where building and construction projects regularly have planning cycles that are as many as 10 years. The TRIA program is set to expire at the end of the year, and insurers have been forced to alter their policies to exclude terrorism coverage if Congress fails to act.
“Extending TRIA should be a simple decision given the vocal support for the program from insurers, policyholders, and the communities they serve,” Grande said. “Members of Congress haven’t given themselves much time, and we strongly urge them to start work on this bill and ensure that terrorism coverage will be available next year for businesses and communities across the country.”