House Hearing Reviews Terrorism Risk Insurance Act's Market Role & Reauthorization
The U.S. House Financial Services Subcommittee on Housing and Insurance recently held a hearing assessing the Terrorism Risk Insurance Act of 2002 (TRIA) and its impact on terrorism insurance markets domestically and globally. Subcommittee Chair Mike Flood highlighted TRIA's role in sustaining an operational terrorism insurance market, enabling entities to secure coverage against terrorism risks effectively. Chairman French Hill emphasized the importance of reauthorizing and enhancing TRIA to bolster economic security and national resilience.
Discussion included the Federal Insurance Office's (FIO) historical involvement in administering TRIA, noting that the terrorism risk insurance program predated FIO without operational issues. Members debated the office's future role amidst considerations linked to Dodd-Frank regulatory reforms.
TRIA's connection to national energy security was noted, with testimony underscoring its facilitation of long-term infrastructure investments by energy companies due to market stability. The program's mechanism involves insurer claim payments followed by partial Treasury reimbursements after certification of qualified terrorist events and loss thresholds are met.
Industry leaders recounted TRIA's critical function after the September 11 attacks, which resulted in estimated insured losses of $60 billion. The absence of terrorism coverage pre-TRIA caused significant economic disruptions, particularly in real estate and commercial mortgage markets. TRIA was enacted to ensure continued availability and affordability of terrorism insurance and to stabilize the insurance market during transitional periods.
Experts stressed that TRIA's federal backstop promotes broader economic confidence by maintaining terrorism insurance availability, a factor influencing business investments and hiring decisions. The approaching reauthorization deadline generates market attentiveness, as uncertainty may impact insurance product offerings and premiums.
Overall, the hearing underscored TRIA's significance in supporting the insurance industry's capacity to manage terrorism-related risks, maintaining market stability, and its broader implications for economic growth and infrastructure development.