NEW YORK—The odds are in favor of renewal for the Terrorism Risk Insurance Act, but do not expect expansion of the program says William R. Berkley, chairman and CEO of W.R. Berkley Crop.
"There is not great enthusiasm in Washington to renew TRIA," says Berkley, yesterday during the Standard & Poor's Rating Service Insurance Conference here. "But this improving housing industry and construction industry will put additional pressure on TRIA [renewal]. I'm optimistic as of today that at best there is a 60/40 chance that it will be extended."
He says he see no appetite for expansion of the program despite the fact that everyone admits terrorism coverage is needed, but like the debate over taxes and the deficit, it is caught-up in an ideological debate over the role of government in the private sector.
Gregory C. Case, president and CEO of Aon, says TRIA is not an insurance issue but a client issue. Without the terrorism backstop, insurance will not be available for major construction projects.
"There has to be some progress to help clients in their industry—period," says Case on Congressional action.
TRIA, enacted after 9-11, and reauthorized in 2007, is set to expire in 2014. The act caps the government's coverage of insurance losses at $100 billion after insurers pay a deductible of 20 percent of their direct earned premium. The trigger is a loss of $100 million after the Secretary of Treasury determines if there has been an act of terrorism. So far this year, Congress has seen three bills introduced to extend the program for 10 years.
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