Risk Managers Urge Permanent, Expanded TRIA

WASHINGTON--A risk managers group called Friday for a permanent program covering widely expanded areas of terrorism risk not included in the present Terrorism Risk Insurance Act.

The position, put forward by the Risk and Insurance Management Society Inc., is close to that of the incoming Democrat congressional leaders.

As it now stands, the Terrorism Risk Insurance Act program is set to expire at the end of 2007, barring congressional action.

In a statement expressing its position, RIMS said, "Without the stability offered by a permanent long-term solution, our members are faced with an uncertain and costly marketplace that is not equipped to assist in the protection and sustainability of our country's assets."

"Something must be done," the organization said, "to ensure terrorism insurance continues to be available to buyers of commercial insurance in a comprehensive and affordable manner once TRIA expires. Time is of the essence."

RIMS urged a permanent system that would be significantly expanded from the current program, including coverage for all commercial property, workers' compensation and liability lines, as well as for damages resulting from nuclear, biological, chemical or radiological attacks.

"Currently, TRIA is silent on NBCR, meaning that if it is covered in the underlying insurance contract, then TRIA will respond," the group said.

"For workers compensation insurance, carriers cannot exclude NBCR risks. Therefore, TRIA is critical to support this catastrophic exposure. In other lines such as property, it is common for insurers to specifically exclude coverage for NBCR, meaning no coverage is available for these risks.

"This represents a major gap in coverage, and RIMS believes this should be addressed going forward as the evaluation takes place for a long-term solution."

RIMS may get what it is looking for from a new terrorism risk system, based on comments made by the incoming chairmen for key House and Senate committees on the issue.

Both Rep. Barney Frank, D-Mass., who will head the House Financial Services Committee in the 110th Congress, and incoming Senate Banking Committee Chairman Chris Dodd, D-Conn., have said they will work towards establishing a permanent terrorism risk system early next year.

While speaking at a Consumer Federation of America event, Rep. Frank also spoke of expanding the breadth of the current TRIA program to the level that RIMS calls for, adding that the perception of TRIA as a subsidy for the private sector is a "mistake."