Schumer Bill Would Modify TRIA

WASHINGTON–Legislation that would modify the federal measure that provides government support for insurers in the event of catastrophic terrorism loss has been introduced by Sen. Charles Schumer, D-N.Y.

The legislation, S. 2621, introduced on Monday would temporarily lower insurer deductibles for the program after a major loss to ensure that companies can withstand multiple attacks within a short time frame.

A similar provision was included in the House version of the Terrorism Risk Insurance Act extension legislation last year, but was not included in the final version signed by President Bush in December.

David Sampson, president and chief executive officer of the Property and Casualty Insurers Association of America, said the group supported the reset provision concept.

“Unfortunately, future terrorist strikes on our soil are likely to happen,” he said. “If two such events were to occur in a short time frame, the insurance market would be called upon to respond to a second major act of terrorism before the previous incident's losses have been paid and before the market has completely rebounded. This could cripple the market.”

The reset provision, Mr. Sampson added, would solve the problem and help decrease uncertainty in those markets viewed as especially vulnerable to terrorist attacks.

“Resetting the program deductibles will help stabilize the market and encourage insurers to continue making terrorism coverage available in the future without fear of insolvency,” Mr. Sampson noted. “This also will help commercial insurance consumers in areas previously attacked, or perceived to be vulnerable, to have access to terrorism insurance coverage.”