The National Association of Mutual Insurance Companies welcomed the introduction today of legislation to maintain the risk-sharing model established by the Terrorism Risk Insurance Act.
Introduced by Reps. Michael Grimm, R-N.Y., Carolyn Maloney, D-N.Y., and eight co-sponsors, the bill extends the TRIA program for five years beyond its current expiration date of Dec. 31, 2014.
"NAMIC applauds Reps. Grimm, Maloney and their co-sponsors for their leadership on this important issue," said Jimi Grande, senior vice president of federal and political affairs for NAMIC. "The TRIA program is a crucial piece of our national security infrastructure and plays a vital role in fostering economic development by ensuring terrorism coverage will be available."
NAMIC has and continues to push for a swift extension of the TRIA program. Although its expiration date is nearly two years away, Grande cautioned that the negative effects of failing to extend the program will be felt far sooner.
"Reauthorization this year is critical because of the extended lead time needed for insurance policies in commercial finance," he said. "If Congress fails to act swiftly, new commercial lending will halt and commercial insurance policies could be nullified. Additionally, commercial real estate experts estimate that a lapse in TRIA would cause the technical default of commercial loans with terrorism insurance and the devaluing of over $1 trillion in commercial mortgage backed securities."
The legislation would extend the program for five years beyond the current expiration date, until Dec. 31, 2019. Created in the wake of the Sept. 11, 2001 terrorist attacks, the TRIA program was designed to foster a private market for terrorism coverage. The program was extended in 2005 and 2007.
"Unlike hurricanes or fire, terrorism risk is almost entirely unpredictable, and will adapt to counter efforts to mitigate against it," Grande said. "Additionally, much of the information an insurer would need to measure a particular risk - such as the number of times a property has been targeted or the potential means of attack - are rightfully kept classified by federal law enforcement."
Grande said NAMIC is encouraged by the bill sponsors' understanding of the unique complexities of terrorism, and of the challenges to our nation's ability to recover from an attack in the absence of private sector involvement made possible by the TRIA program.
"TRIA remains critical to ensuring the continued recovery of the commercial real estate market, and the overall economy," Grande said. "NAMIC urges Congress to reauthorize the program without delay."