The Terrorism Risk Insurance Act (TRIA) was originally established after Sept. 11, 2001, as a transitionary measure to allow the insurance industry time to resolve pricing and coverage issues without federal assistance. Today, many question whether the law is still necessary. Extended in 2005 and again in 2007, TRIA is set to expire at the end of 2014, and one of the issues being examined by Congress is the impact expiration will have on taxpayers.
A recent RAND Corporation report, "The Impact on Federal Spending of Allowing the Terrorism Risk Insurance Act to Expire," concluded that having TRIA in place will result in less federal spending in the event of a terrorist attack that results in losses of under $50 billion. "In the absence of a terrorist attack, TRIA costs taxpayers relatively little and, in the event of a terrorist attack comparable to any experienced before, it is expected to save taxpayers money."
From an insurer's perspective, "TRIA greatly minimizes the possibility of an insurer facing potentially ruinous losses from extremely damaging terrorist attacks. This assurance, along with the requirement that insurers offer terrorism coverage, has helped support a commercial terrorism insurance market."
Should TRIA Be Renewed?
|