New York's top financial-services regulator says, based on hisperspective as a former prosecutor of terrorism, the Terrorism RiskInsurance Act should be made permanent to respond to unconventionalthreats.

Benjamin Lawsky, superintendent of the New York Department ofFinancial Services, said at a meeting of the Federal AdvisoryCommittee on Insurance (FACI), held Wednesday, that whilethe U.S. has made progress in dealing with conventional terrorism,"unconventional terrorism by its very nature is always going to bewith us."

So why, Lawsky said, "aren't we talking about re-upping TRIA ina permanent way?"

He said that, as a former terrorism prosecutor, "I am saying itis something that we are going to live with forever—if industryisn't evolving for that risk, why aren't we joining other countrieswhich don't have to go through this [perennial] debate?"

He added, "From New York's perspective, let's just do this onceand be done with it."

Meanwhile, Michael McRaith, the director of the FederalInsurance Office, pointed to the potential impact on workers'compensation availability should TRIA be allowed to expire.

Marsh & McLennan officials told McRaith that, in the eventTRIA is not reauthorized, carriers will just stop offeringthe coverage to employers, and also that these insurers will leavethe assigned risk pools if there is no limit onexposure. 

McRaith is charged with writing a report required of thePresident's Working Group (PWG) on Financial Markets on theavailability and affordability of terrorism-riskinsurance. The report is due this year. He asked at themeeting that FACI members provide him with data he could use tojustify a continued government presence in terrorism-riskreinsurance.

Marsh presented a report to McRaith showing that the percentageof companies buying property terrorism insurance has been in thehigh-50-percent to low-60-percent range since 2009. The report saysthe Northeast has the highest take-up rates—in the mid 70 percentrange—and take-up rates are increasing in the West.

FACI Chair Brian Duppereault, who recently resigned as MarshCEO, told McRaith, "I testified several years ago (on TRIA renewal)and I think nothing has changed- since then; we should not throwout one of the few federal programs that works."

Sean McGovern, director and general counsel of Lloyd's NorthAmerica, said, "I don't believe philosophically thatgovernments should be involved in insurance, but practically, withterrorism, that is the world we live in, and it is offered as abackstop in other countries—and the U.S. government should beinvolved."