COLUMBUS, Ohio – A resolution sponsored by state Rep. Michael Stinziano that passed the Ohio House unanimously this week encourages Congress to reauthorize federally provided terrorism reinsurance so that insurers can maintain stability in the insurance and reinsurance markets and continue to deliver substantive and direct benefits to businesses, workers and consumers.
“Congress needs to reauthorize TRIA,” said Stinziano, a Columbus Democrat, who serves on the House Insurance Committee. “Terrorism is a real threat, unfortunately, and we need to maintain the programs we put in place following the attacks of September 11 to avoid paralysis in our economy, especially in construction, tourism, business travel, and real estate finance that resulted in many businesses, both large and small, no longer being able to find nor afford the insurance required by lenders and others for a variety of business transactions.”
Congress originally passed the Terrorism Risk Insurance Act (TRIA) in 2002 in which the federal government agreed to provide terrorism reinsurance to insurers and reauthorized the arrangement by passing the Terrorism Risk Insurance Extension Act of 2005 and the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA), which is set to expire in 2014 unless Congress reauthorizes the program.
Under TRIPRA, the federal government provides reinsurance after industry-wide losses because of terrorism attacks tops $100 million. After an insurer has reached that threshold, the insurer pays 15 percent of the residual losses and the federal government pays the remaining 85 percent.
Without federally provided reinsurance, property and casualty insurers will likely not purchase terrorism reinsurance and will therefore likely not provide coverage for acts of terrorism, according to Stinziano.