RIMS Supports TRIA Extension

RIMS Supports TRIA Extension

NU Online News Service, March 3, 1:34 p.m. EST?The Risk & Insurance Management Society Inc. called on Congress to approve legislation extending the Terrorism Risk Insurance Act for an additional two years.[@@]

Action by Congress, RIMS said, would avoid market disruptions like those that occurred after Sept. 11, 2001, before the adoption of TRIA. RIMS urged Congress to approve this legislation as soon as possible.

Its member companies, which include 84 percent of the Fortune 500 corporations, RIMS said, are concerned about the capacity of workers' compensation and property-casualty insurers to underwrite terrorism coverage without a federal backstop in place.

As a reinsurance backstop, RIMS said, TRIA opens commerce by quantifying maximum loss exposure so that insurers and reinsurers can operate their businesses prudently. With possible losses known, insurers and reinsurers can continue to offer commercial insurance to corporations and public and private entities that need terrorism coverage.

Prior to the enactment of TRIA, and after the Jan. 1, 2002 expiration of reinsurance contracts, required limits of commercial insurance were not available, RIMS said. TRIA continues to meet the needs of a significant portion of the risk management community. For them, RIMS said, TRIA remains a critical need.

Members of RIMS who have a concentration of employees in a single location had difficulty in purchasing workers' compensation insurance after Sept. 11, 2001 and prior to passage of TRIA. TRIA provided market support to ordinary employers, not just owners of target buildings or businesses in a few major cities. Returning to this market restriction could impact the operations of a significant number of RIMS members, the organization said.

RIMS voiced concerns that the stable reinsurance market that policymakers anticipated when they determined a timeline for TRIA does not yet exist. Because of a variety of other market-driven losses, the current reinsurance market is not stable and will not be able to fully assume the risk of terrorism, which is extremely difficult to predict or price, RIMS added.

RIMS said it believes TRIA extension legislation is necessary to avoid the market disruptions that occurred after Sept. 11, 2001 and before the adoption of TRIA.

The organization said passage of the legislation will ensure that terrorism insurance is available to buyers of commercial insurance in a comprehensive and affordable manner.

RIMS called reliance on TRIA critical in the short term and said it feels that it is imperative to find other mechanisms to provide effective and reasonable commercial insurance options against catastrophic terrorist attacks.

The group said it welcomes the provision that directs the Treasury Department to provide a report to Congress on long-term solutions for expanding availability and affordability of terrorism insurance without a federal backstop. It called extension of TRIA "critical to our members and the future of our businesses."