COLUMBUS, Ohio -- Congress should reauthorize the program that provides terrorism reinsurance for insurance companies to maintain stability in the insurance and reinsurance markets so that insurers can continue to provide terrorism risk insurance coverage to businesses, workers and consumers, according to a House Concurrent Resolution introduced by state Rep. Michael Stinziano.
“ Reauthorization of TRIA is clearly needed,” said Stinziano, a Columbus Democrat, who serves on the House Insurance Committee. “Unfortunately, terrorism remains a real threat today. The federal government needs to continue to provide the federal backstop so that insurers and reinsurers can continue to help people insure against losses caused by terrorist attacks..”
Prior to the terrorist attacks of September 11, 2001, insurance coverage for losses caused by terrorist attacks was routinely included in insurance policies, often at no additional cost to the policyholder. However, after September 11, most insurance companies stopped offering coverage caused by terrorist attacks. As a result, many businesses, especially small businesses, could no longer find nor afford the insurance required by lenders and others for a variety of business transactions.
In response, in 2002 Congress originally passed the Terrorism Risk Insurance Act (TRIA) establishing a program to provide terrorism reinsurance to insurers. Congress has twice reauthorized the program by passing the Terrorism Risk Insurance Extension Act in 2005 and the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA). The current program will expire in 2014 unless Congress decides to reauthorize it.
Under TRIPRA, the federal government provides payment after industry-wide losses caused by terrorist attacks top $100 million. After an insurer has reached a required threshold, the insurer pays 15 percent of the residual losses and the federal government pays the remaining 85 percent.
Without the existing federally provided reinsurance backstop, property and casualty insurers will likely no longer provide coverage for losses caused by acts of terrorism causing significant economic problems throughout the country, according to Stinziano.
Stinziano’s resolution will be assigned to a standing House committee for further study.