NU Online News Service
WASHINGTON–Reducing federal support of the Terrorism Risk Insurance Program in 2011 "would have a far-reaching effect on the availability and affordability of terrorism risk insurance," the Insurance Information Institute (I.I.I.) said in a recent paper.
The I.I.I. paper used the 9/11 anniversary to remind federal officials that terrorism will remain "a serious and continuous threat to the United States in the decade ahead."
The I.I.I. comments were prompted by the Treasury Department's request for formal comments on whether to reduce the potential exposure of the government to a terrorist event. The I.I.I. did not submit formal comments but instead used the 9/11 anniversary to disclose that it had updated two previous reports dealing with terrorism.
"The nine-year anniversary of September 11 is an important reminder that any changes to the law [would introduce] a measure of market uncertainty which in turn could lead to pricing and capacity volatility, problems that the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), with its seven-year extension of the law, was designed to end," said Robert P. Hartwig, I.I.I. president and economist.
The program in its current form is scheduled to run through 2014.
"TRIPRA makes terrorism insurance coverage available and affordable for many key projects that might otherwise never get beyond the drawing board," Hartwig said.
"The last thing the fragile U.S. economy needs is for any of these projects to be derailed," he added.
"The 9/11 attack was the largest loss in the history of the global insurance industry until Hurricane Katrina in 2005," Hartwig said. "As construction moves ahead on the new World Trade Center site, insurance claims dollars continue to play an essential and highly visible role in rebuilding lower Manhattan."
He said that in July 2008, Risk Management Solutions, a risk modeling firm, put potential insured losses from a terrorist attack in the U.S. at $1.6 billion, an increase of 8 percent from the previous year.
Hartwig, citing RMS statistics, said RMS said terrorism targets are more likely to be in the commercial or private sector, such as sports stadiums, now that governments' counter-terrorism efforts have been stepped up.
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