What's Happening?
Insurance industry representatives are urging lawmakers to reauthorize the Terrorism Risk Insurance Act (TRIA), a federal backstop for terrorism risk, which is set to expire on December 31, 2027. Michelle Sartain, president of Marsh U.S. and Canada, emphasized the importance of TRIA in maintaining a stable terror insurance market, particularly for nuclear, biological, chemical, and radiological events. The act, first initiated in 2002, requires insurers to offer terrorism coverage, with the government stepping in if losses from a certified terrorism event exceed certain thresholds. The reauthorization is crucial for industries such as healthcare and higher education that rely on TRIA for insurance coverage. The potential expiration of TRIA could lead to increased prices and capacity shortfalls for central business districts and at-risk industries.
Why It's Important?
The reauthorization of TRIA is significant for maintaining economic stability and ensuring the availability of terrorism insurance coverage. Without it, insurers may limit coverage to preferred locations, increasing costs for others and potentially affecting construction projects and economic development. The program has supported significant construction and economic growth without taxpayer cost. The uncertainty surrounding TRIA's future could impact companies' decision-making processes regarding hiring and investments, highlighting the need for a stable insurance market to support economic activities.
What's Next?
As the expiration date approaches, insurers and rating agencies will closely monitor legislative activities related to TRIA. The insurance industry is advocating for a 10-year reauthorization without significant changes to the program's structure. The American Property Casualty Insurance Association has called on Congress to reauthorize TRIA, emphasizing its importance in maintaining market confidence and ensuring the availability of terrorism coverage.
