Category: TRIA

Seven-Year TRIA Reauthorization Advanced by House Financial Services Committee

Posted on by Trey Jackson

House Financial Services Committee Chairwoman Maxine Waters (D-CA)

The House Financial Services Committee yesterday unanimously (57-0) passed the Terrorism Risk Insurance Program Reauthorization Act of 2019 (H.R. 4634) – a “clean” seven-year extension of the Terrorism Risk Insurance Act (TRIA), which is a top policy priority of The Real Estate Roundtable. 

  • The bipartisan House compromise bill also requires two studies: a U.S. Government Accountability Office (GAO) study on the cyber terrorism market and a biennial Treasury reporting on the ‘availability and affordability’ of TRIA coverage for places of worship.
  • Committee Chairwoman Maxine Waters (D-CA), above, in her opening committee markup statement noted, “This bipartisan bill provides a simple long-term reauthorization of the Terrorism Risk Insurance Program. Without a reauthorization, the program would expire at the end of 2020, but we could experience the harmful effects of a failure to reauthorize as soon as January of 2020. I am very pleased that I have reached a bipartisan compromise with Ranking Member [Patrick] McHenry [R-NC] on this issue for a seven-year reauthorization of this very important program.” (Committee Markup documents and video, Oct 29)
  • The Coalition to Insure Against Terrorrism (CIAT), which includes The Real Estate Roundtable, wrote to the committee’s leadership on Tuesday in support of H.R. 4634.  (CIAT letter, Oct. 29)
  • TRIA, originally passed in 2002, has been extended in 2005, 2007 and again in 2015 – following a 12-day lapse when Congress failed to complete their work on reauthorization at the end of 2014.
  • TRIA was the focus of a discussion during The Roundtable’s Oct. 30 Fall Meeting with American Property and Casualty Insurance Association President and CEO David Sampson.  The discussion emphasized that a long-term, clean TRIA reauthorization by Congress is needed as soon as possible to avoid market dislocation and provide certainty to commercial real estate policy holders who are actively renewing their coverage. 
  • Roundtable President and CEO Jeffrey DeBoer noted during an October 1 podcast episode of Through The Noise, “Businesses and facilities of all types need to see the terrorism risk insurance program extended. This need applies to hospitals, all commercial real estate buildings, educational facilities, sports facilities, NASCAR and theme parks, and really any place where commercial facilities host large numbers of people.”

The next step toward TRIA reauthorization is a floor vote in the House, which may occur before year-end. 

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House Hearing on TRIA Reauthorization Announced for Oct. 16

Posted on by Trey Jackson

House Financial Services Committee Chairwoman Maxine Waters (D-CA)

House Financial Services Committee Chairwoman Maxine Waters (D-CA), above,  yesterday announced an Oct. 16 subcommittee hearing that will focus on “Protecting America: The Reauthorization of the Terrorism Risk Insurance Program.”  (Committee news release, Oct. 3)

  • Additionally, Financial Services Committee Member Carolyn Maloney (D-NY) will host a roundtable discussion on the reauthorization of the Terrorism Risk Insurance Act (TRIA) on Oct. 8 in New York City.
  • With TRIA currently set to expire at the end of 2020, a long-term, clean reauthorization is a top priority for The Real Estate Roundtable.  Yesterday, TRIA was a key topic of discussion during meetings of The Roundtable’s Homeland Security Task Force and Real Estate Capital Policy Advisory Committee in New York City. 
  • TRIA was originally enacted in 2002 in response to the inability of insurance markets to predict, price and offer terrorism risk coverage to commercial policyholders.  The law was extended in 2005, 2007 and again in 2015 – following a 12-day lapse when Congress failed to complete their work on reauthorization at the end of 2014.
  • The Roundtable and nearly 350 companies and organizations urged Congress last week to swiftly pass a long-term TRIA reauthorization. (Roundtable Weekly, Sept. 20)
  • The Sept. 17 coalition letter notes, “The American business community remembers all too well the twelve-day lapse in the program in early 2015 and the disruption that lapse played in a variety of markets.  We urge Congress to help provide much needed certainty by passing a long-term reauthorization of this important program without delay.”
  • Absent TRIA, there is not sufficient insurance and reinsurance capital available to provide comprehensive terrorism coverage to U.S. insurance buyers,” the coalition states.  (Reinsurance News, Sept. 17)
  • A 2019 Marsh study shows the highest “take-up” rates for terrorism risk insurance are in the education, media, financial institutions, real estate, hospitality and gaming, and health care sectors – all above 70%.

During an October 1 podcast episode of “Through The Noise,” Roundtable President and CEO Jeffrey DeBoer noted, “Businesses and facilities of all types need to see the terrorism risk insurance program extended. This need applies to hospitals, all commercial real estate buildings, educational facilities, sports facilities, NASCAR and theme parks, and really any place where commercial facilities host large numbers of people.”

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Senate Banking Committee Holds TRIA Hearing; Coalition to Insure Against Terrorism Urges Long-Term Reauthorization

Posted on by Trey Jackson

A hearing on The Reauthorization of the Terrorism Risk Insurance Program  before the Senate Banking Committee was held on June 18 as the Coalition to Insure Against Terrorism  (CIAT) – including The Real Estate Roundtable – submitted  comments  urging Congress to pass a long-term reauthorization of the Terrorism Risk Insurance Act (TRIA). 

CIAT’s comment letter  to Chairman Mike Crapo (R-ID), above, and Ranking Member Sherrod Brown (D-OH) urges prompt congressional action for a long-term reauthorization of this critical program.
  • CIAT’s comment letter to Chairman Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH) urges prompt congressional action for a long-term reauthorization of this critical program.  The letter states, “At almost no cost to the taxpayer, the Program has been the key factor in ensuring that the private insurance market has remained intact and continues to meet the needs of commercial policyholders during the on-going threat of a future terrorist attack – all while minimizing federal taxpayer exposure.”   
  • Senate Banking Committee Chairman Michael Crapo (R-ID) discussed reauthorization of the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) at The Roundtable’s Spring Meeting in April.  (Roundtable Weekly, April 12).  The Committee’s Ranking Member, Sen. Sherrod Brown (D-MA), acknowledged the need to extend TRIA before its expiration at The Roundtable’s Annual Meeting on June 11 in Washington.  (Roundtable Weekly, June 14) 
  • Testifying before the committee, Marsh’s property terrorism placement and advisory leader Tarique Nageer noted that the expiration of TRIPRA without a replacement could create capacity shortfalls, especially for firms with “significant workers’ compensation accumulations. 
  • Nageer stated, “We are already seeing an impact on policies that extend beyond 2020, with some insurers either seemingly unwilling to offer terrorism coverage beyond the expiration of TRIPRA or seeking to increase prices to cover the additional risk to their portfolios. Without a decision to reauthorize or extend TRIPRA, we expect to see more sunset provisions in policies and higher costs as we get closer to December 31, 2020.” (Nageer’s testimony, June 18)

    Marsh’s 2019 Terrorism Risk Insurance Report 

  • Chairman Crapo stated that he anticipates additional “balanced reforms” to TRIA that “reduce taxpayer exposure” without substantially increasing costs or decreasing take-up rates.  His focus was on what changes are necessary based on data, not whether the program is needed.  Only two Republicans attended the hearing, whereas the Democrats in attendance voiced unified support of TRIA. (Senate Banking Committee hearing video, statements and testimony)
  • Chairman Crapo and Sen. Brown agreed that it was important that reauthorization take place sooner rather than later to ensure a lapse in coverage does not happen again.   Sen. Menendez (D-NJ) noted during the hearing that a lapse in 2014 created uncertainty, resulted in sunset clauses on policies, and increased costs on long-term construction deals.  A similar situation could begin as early as January 1, 2020.  
  • Additional hearings on TRIA are expected that would include policyholder and insurer witnesses and could address issues such as the length of another reauthorization and the scope of TRIA regarding cyber, nuclear, biological, chemical, and radiological risks. 

A long-term authorization of TRIA continues to be a top policy priority of The Real Estate Roundtable.  (Capital and Credit sections of The Roundtable’s 2019 Policy Agenda and  FY2019 Annual Report) 

Other Resources:

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Treasury Department Reports on Effectiveness of Terrorism Risk Insurance Program

Posted on by Trey Jackson

The federal government’s Terrorism Risk Insurance Program has been effective in making terrorism risk insurance available and affordable throughout the United States, according to a recent report by the U.S. Department of the Treasury’s Federal Insurance Office. 

The  Treasury based its June “Report on the Overall Effectiveness of the Terrorism Risk Insurance Program” on marketplace data collected for the past two years, along with public comments such as those submitted by the broad-based Coalition to Insure Against Terrorism (CIAT), which includes The Real Estate Roundtable.

  • The Terrorism Risk Insurance Program – authorized by the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2015 – provides a federal backstop for certain U.S. property and casualty insurance losses resulting from a certified act of terrorism.
  • TRIPRA directs Treasury to provide reports on the Program’s effectiveness and estimate the total amount of premiums earned on terrorism risk insurance since January 1, 2003.  Treasury published its first Program effectiveness report two years ago.  (Roundtable Weekly, July 8, 2016).
  • In last month’s report, Treasury’s estimate of total earned premiums for terrorism risk insurance from 2003 to 2017 is approximately $37.6 billion (excepting captive insurers).  This amount is between 1 and 2 percent of the total premiums earned in the Program-eligible lines of insurance during that period.  Treasury estimates that an additional $7.4 billion has been earned by captive insurers. 
  • The total of terrorism risk premiums earned is comparable to the loss sustained by the insurance industry in connection with the attacks on September 11, 2001. 
  • While the purchase of terrorism risk insurance is not mandated by the Program, a significant proportion of commercial policyholders nationwide have elected to obtain such insurance, and take-up may be even higher in metropolitan areas at greater risk of terrorism. 

Without Congressional action, the Terrorism Risk Insurance Program, authorized by TRIPRA, will expire on Dec. 31, 2020.  The Roundtable is working with industry partners to develop a proposal that would make terrorism insurance available for the long-term.

Coalition To Insure Against Terrorism (CIAT) Submits Comments to Treasury on Effectiveness of Terrorism Risk Insurance Act(TRIP)

Posted on by Trey Jackson

The Roundtable and its partners in the Coalition to Insure Against Terrorism (CIAT), submitted  detailed comments Monday on the overall effectiveness of the Terrorism Risk Insurance Program (TRIP) to the U.S. Department of Treasury’s Federal Insurance Office (FIO).

This week’s   comments   support TRIP as a “tremendous success” yet provide recommendations on three primary aspects of the program: Standalone terrorism insurance; Nuclear, Biological, Chemical or Radiological (NBCR) availability; and Cyber terrorism.

The Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) requires  Treasury to issue proposed rules to implement changes to TRIP, which is set to expire on Dec. 31, 2020 (Roundtable Weekly – Jan. 16, 2015) 

As FIO works on preparing its 2018 report on TRIP’s effectiveness, the coalition’s comment letter presents views from policyholders and risk managers – and supplement earlier remarks submitted by CIAT in 2016 (Roundtable Weekly, June 3, 2016). 

This week’s comments support TRIP as a “tremendous success” yet provide recommendations on three primary aspects of the program: Standalone terrorism insurance; Nuclear, Biological, Chemical or Radiological (NBCR) availability; and Cyber terrorism. 

The CIAT comments note there has been no evidence that private markets can develop adequate terrorism risk capacity without some type of federal participation.  The letter also notes that “in the wake of a major terrorist attack, (the program) ensures that a significant portion of the costs of recovery would be borne by the private sector.”  

The comments also include a suggestion that FIO should consider making the program permanent, stating that most other countries insurance programs are “of continuous duration, and it would benefit market stability to make TRIP permanent as well.” 

How other nation’s implement terrorism risk insurance programs was the focus of a discussion with Julian Enoizi, chief executive of Pool-Re during last week’s Spring Roundtable Meeting in Washington, DC. 

Additionally, Marsh  recently released its 2018 Terrorism Risk Insurance Report, which presents data on purchasing and pricing trends in the terrorism insurance marketplace. The report finds that the highest terrorism insurance take-up rates by industry in 2017 were real estate companies, education entities, health care organizations and financial institutions.  It also explores how the terrorism insurance market continues to innovate and respond to the needs of global organizations in light of an evolving risk landscape.  (BusinessInsurance, April 20, 2018) 

With TRIP set to sunset at the end of 2020, The Roundtable has formed a Terrorism Risk Insurance Working Group to explore potential options in advance of the reauthorization debate that is expected to begin in earnest next year.  The Working Group’s goal is to develop a strategy for a permanent, or long-term, national terrorism insurance program that would enable policyholders to secure the terrorism risk coverage they need without facing periodic renewals by the government.