Congress Passes TRALA-supported Reauthorization of Terrorism Risk Insurance Act
In a strong bipartisan manner, both the U.S. Senate and House of Representatives have approved TRALA-supported legislation - the Terrorism Risk Insurance Act (TRIA) - which is on its way to President Obama's desk and is expected to be signed into law. Passage of this legislation will reauthorize the program that was first enacted following the terrorist attacks on September 11, 2001. The TRIA created a "backstop" which holds that the federal government would help cover losses from a catastrophic terrorist attack if losses associated with such an attack exceed a certain threshold. The program has been reauthorized several times since it was first created in 2002, but it temporarily expired on December 31, 2014.
The reauthorization of the program does include some changes from the latest version of the law. Previously, losses associated with an attack had to surpass the $100 million threshold before the program would kick in, but that amount has now been increased to $200 million. Additionally, the new law increases the percentage that insurers must pay above that threshold, from 15% to 20%.
TRALA and scores of other businesses and associations had previously urged Congress to ensure the TRIA program continues, by stating in a letter to every member of Congress that "...following the attacks, the inability of insurance policyholders to secure terrorism risk insurance contributed to a paralysis in the economy, especially in the construction, travel and tourism, manufacturing, and real estate finance sectors." The letter goes on to state that "Without the backstop that TRIA provides, the private insurance market would simply be unable to provide adequate levels of terrorism risk insurance."
The TRIA program has never paid out any funds since it was created, but TRALA and others agree that the federal guarantee is important to economic stability because it creates the ability for so many industries to obtain affordable terrorism insurance.