The Senate Banking, Housing and Urban Affairs Committee held a hearing last week on reauthorizing the 2002 Terrorism Risk Insurance Act — set to expire in 2014 — to protect commercial entities against terrorism-related losses exceeding $100 million.
Under the TRIA program, passed after the Sept. 11, 2001, terror attacks that led insurance companies to withdrawal terrorism risk coverage from the market, insurers are required to provide coverage in exchange for a government backstop.
Sen. Tim Johnson (D-S.D.), the chairman of the Senate committee, said in a statement before the hearing that he hopes lawmakers can find a bipartisan consensus to reauthorize the program, which has been reauthorized by Congress twice.
“While a few may seek dramatic changes or even try to eliminate the program, we should remember that taxpayers have not lost any money on the program,” Johnson said. “The program’s unique structure has fully protected taxpayers while promoting economic growth by preventing interruptions in insurance coverage and providing certainty for commercial property developers working on stadiums, universities, malls and other projects across the country.”
Insurance Information Institute President Robert Hartwig, a witness at the Senate hearing, said the program was an “unqualified success” that has become an “indispensable component of national security,” adding that the cost to taxpayers has only been “negligible administration costs,” Business Insurance reports.
Another witness, Erwann O. Michel-Kerjan, the managing director of the Center for Risk Management and Division Processes Operations at the University of Pennsylvania’s Wharton School, said that without the program, taxpayers could end up paying the same amount through federal disaster relief programs.