Supporters of the federal government’s terrorism insurance backstop are wanting a 10-year extension when Congress finally addresses the issue. However, they will accept six if they can get that number of years.
The current legislation of the Terrorism Risk Insurance Act (TRIA) expires in 2020. It was set up in 2002 and extended in 2003, 2005 and 2015.
Insurers and other supporters speaking at the National Association of Insurance Commissioners’ summer meeting say they’d like a six to 10-year extension. Aaron Davis of Aon Property Broking said it is “necessary to create stability in the marketplace and get through the sort of cyclical nature we’ve had with 2003, 2005, 2015 and now 2020,” he said. “It’s no longer a short-term program. It needs to be long-term.”
Jeffrey Czajkowski of the Center for Insurance Policy and Research (CIPR) agrees. He said data shows take up rates in the nation’s Tier 1 cities is somewhere between 80% and 90%. In the Tier 2 cities those rates are between 70% and 80%.
Davis said he’s optimistic that Congress will act on an extension. “We’re seeing a lot more discussions happening to do this sooner rather than later,” Davis said and he pointed to a hearing held by the Senate Banking Committee and another by the House Financial Services Committee.
Both are getting industry feedback.
Davis said right now if a 9/11 happened — and with it’s current dollar estimate of $45 billion in losses — would be absorbed by private insurance. No problem. So the federal government isn’t likely to be out all of that much income if another terrorism attack occurs.
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