Washington–An insurance trade group official said at a symposium on terrorism last week that her industry will be hurt if the Terrorism Risk Insurance Act is not extended.
"The U.S. economy will suffer if a federal public/private partnership to insure against catastrophic terrorist attacks is not in place to continue beyond Dec. 31, when the Terrorism Risk Insurance Act (TRIA) expires," said Debra Ballen, executive vice president of the Washington-based American Insurance Association.
Her comments came as a key Treasury Department report on TRIA was expected to be released at any moment. The report mandated by Congress concerns whether the act, which provides a federal backstop for foreign terrorism risk, has fulfilled its function.
The report must be released by Thursday but neither the White House nor the Treasury Department has given any hints as to when it will be made public.
Congress is awaiting the report as a signal of whether the Bush administration will support an extension, as the industry desires, and the shape and scope such an extension should take, if any.
Ms. Ballen made her comments at a national symposium on the future of terrorism risk insurance sponsored by the RAND Corp. The symposium was held at the University of Southern California in Los Angeles.
At the meeting, RAND officials released a report–"Terrorism Insurance and the Evolving Terrorist Threat"–which calls for an adequate public/private partnership to insure against terror, a national security issue because terrorists are likely to target vital institutions in the U.S. economy.
The report explained that insurance is needed to compensate victims, sustain business operations during a disruption, and rebuild damaged assets and infrastructure.
The RAND study presented at the symposium concluded that a long-term solution to providing terrorism insurance in the United States must address chemical, biological, radiation and nuclear (CBRN) attacks as well as attacks by domestic groups.
The report called for the extension of TRIA to protect against domestic attacks and said CBRN attacks pose "significant challenges" for insurance and may be appropriately covered through a direct government program.
Other suggestions included in the report called for the following:
o Considering mandatory requirements for companies that own or operate systems vital to the functioning of U.S. critical infrastructure to carry adequate levels of insurance.
o Conducting further research on the ability of insurance to prompt increased security in the private sector.
o Establishing an oversight board to review TRIA or its successor's performance and "ensure that it is robust to changes in the underlying risk."
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