Let’s Get TRIA Passed Before Holiday Recess

Congress has 43 days — that’s six weeks from tomorrow — to pass a re-extension to the Terrorism Risk Insurance Act (TRIA).

If Congress does not pass the re-extension, a couple things happen.

1) Since terrorism risk is very expensive and difficult to predict, insurers will likely to raise premiums or back out of the market.

2) Workers’ compensation faces limitless liabilities because it must cover work-related terrorism exposure, which could result in premium increases in states where the unthinkable occurs.

The whole point of TRIA is ensuring that terrorism coverage is accessible and affordable by offering a federally-supported backstop.

If you have a problem with the government getting involved in offering insurance, consider that terrorism risk mitigation depends on government security efforts that insurers cannot incentivize. That makes terrorism coverage quite unique.

_______________
…if the trigger and co-share change too much,
there is the risk carriers will bail out of the market.
_______________

As I explain a past blog and my article, The TRIA Challenge,” prices could already be poised for premium increases due to recent foreign policy decisions that leave the nation more vulnerable to terrorist attacks. Companies need terrorism coverage more than ever.

So what’s the hold up?

To oversimplify, some members of Congress would like to see the insurance industry carry more risk by raising the program “trigger,” or when TRIA can take effect, beyond the current $5 million. (The Boston Marathon Bombing did not reach the $5 million threshold so the insurance industry covered it without TRIA.)

Current legislation would also boosts insurers’ co-share, which is currently 15 percent.

That’s like your health insurance company changing its terms and expecting you to pay a higher deductible and higher co-payments.

Therefore, if the trigger and co-share change too much, there is the risk that carriers will bail out of the market.

Terrorism groups are getting bigger and stronger – and they clearly make it known that they want to attack the United States again. Businesses must be ready.

It’s really quite simple. Businesses need affordable terrorism coverage. Therefore, Congress should pass a re-extension to TRIA.

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