TRIA Extension Gains Support
Washington
A bipartisan agreement exists right now to enact at least a one-year extension of the Terrorism Risk Insurance Act, a senior member of the House Financial Services Committee said last week.
The comments by Rep. Paul Kanjorski, D-Pa., reflected a consistent theme during a hearing on the effectiveness of the TRIA program, as members raised concerns about the uncertainties in the market with TRIA set to expire at the end of 2005, and with Congress facing a very short time frame in which to decide whether to reauthorize it.
In addition to extension of the program, the hearing focused on whether the Treasury Department should extend the "make available" requirement for the program's final year. Under TRIA, insurers must make terrorism coverage available to commercial policyholders through 2004. Treasury is to decide by Sept. 1, 2004 whether to extend the "make available" requirement into 2005.
New York Insurance Superintendent Greg Serio warned that extending the "make available" requirement without reauthorizing TRIA in some form will create uncertainty in the market, because the result would be mandatory coverage offered in 2005 policies that extend into 2006 without a federal backstop if TRIA expires.
Mr. Serio also urged Congress to consider allowing insurers to establish tax-deferred catastrophe reserves, calling this the "singularly most empowering tool" to allow primary carriers to create capacity.
Richard Hillman, director of financial markets and community investment with the U.S. General Accounting Office, said the private market has not found ways to provide terrorism insurance after TRIA expires. As a result, he said, participation in the terrorism insurance market likely will decline significantly after TRIA's expiration.
Reproduced from National Underwriter Edition, April 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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