Rims applauds house financial services committee’s adoption of a
five-year TRIA extension
New York, NY – RIMS, the risk management society, commends the House Committee on Financial Services for approving a bill to reauthorize the Terrorism Risk Insurance Act (TRIA) now, providing policymakers with time to negotiate the terms of the final TRIA extension prior to its December 2014 expiration.
Introduced by Rep. Randy Neugebauer, R-Texas, the bill would extend the TRIA program through 2019. It would also streamline the certification process by vesting certification authority with the Treasury Secretary, who would consult with the Homeland Security Secretary and the U.S. Attorney General before certifying an occurrence as a terrorist event. Under current law, three federal agencies must jointly certify a terrorist event. The bill would also require final certification to take place within 90 days of an occurrence. Current law has no such timeline in place.
“RIMS greatly appreciates the efforts of the Financial Services Committee, especially with regards to the five-year extension of the program and the streamlined certification process,” says RIMS president Carolyn Snow. “While RIMS would have preferred a longer extension, the five-year extension will bring a greater degree of certainty to the terrorism insurance process, and the revised certification provisions will enable the government to act more decisively – and quickly – in declaring an occurrence a terrorist event.
“With only six months until TRIA’s expiration, time is quickly running out but we remain optimistic that the House and the Senate can agree upon a final TRIA bill before the sun sets on this critical federal backstop,” says Snow. “While we hope that terrorism insurance is never needed, TRIA’s existence ensures that private organizations have access to affordable insurance and prevents providers from being solely responsible for incomprehensible losses resulting from a catastrophic terrorist event.”
RIMS continues to support the following principles in development of a long-term solution for TRIA:
Without a TRIA-type program, many entities will simply be self-insured due to lack of availability or affordability of coverage or both - leaving their companies and their workers exposed to an event that could bankrupt the company.
The new program should ensure an orderly and efficient response to minimize any market disruptions and ensure benefits are available to any victims - individuals or companies – from a catastrophic loss scenario.
A private and public partnership provides the best alternative to addressing the long-term needs of availability and affordability of insurance to cover acts of terrorism.
The solution needs to address the long-term availability and affordability of insurance coverage for nuclear, biological, chemical, and radiological events caused by terrorism.
All commercial property, workers’ compensation, auto and general liability lines should be included in any new plan.
Insurance companies writing commercial lines should be required to participate in the program and be required to make coverage available for acts of terrorism.
In February, Snow testified before the Senate Committee on Banking, Housing and Urban Affairs’ hearing entitled, ‘Reauthorizing TRIA: The State of the Terrorism Risk Insurance Market, Part II’ in Washington, DC. Her testimony described the current state of the terrorism risk insurance market; the role TRIA currently plays in the market; and the program’s features that are designed to protect workers, communities, and taxpayers. RIMS will continue to work with the members of the House of Representatives to improve upon certain features of the bill.