Citing concerns that the market is still unable to overcome potential losses from future terrorist attacks, insurance industry representatives recently testified before House panels that the national terrorism insurance backstop should be extended beyond its Dec. 31, 2005, expiration date. Eight insurance associations presented a joint statement at a meeting of the Capital Market Subcommittee and the Oversight and Investigation Subcommittee of the House Financial Services Committee urging Congress to extend the program.
Problems could arise with insurance contracts that will be negotiated in late 2004 and, therefore, extend beyond TRIA’s termination date, the American Insurance Association believes. “There is strong consensus among state insurance regulators, the insurance industry, and commercial policyholders that continuation of the federal backstop for terrorism insurance is essential,” said Eric Goldberg, assistant general counsel for the AIA. “There also is strong consensus that, due to insurance and business cycles, reauthorization cannot wait until shortly before the statute’s scheduled expiration at the end of next year. Congress must take action in 2004 in order to avoid the kind of market dislocation that was so destabilizing prior to the law’s initial passage.”