Following strong support voiced by the California Chamber of Commerce, the U.S. House of Representatives and U.S. Senate voted this week to reauthorize the Terrorism Risk Insurance Act (TRIA).
The vote extended the TRIA for six years. The President is expected to sign the bill.
Reauthorization Critical
Reauthorizing the TRIA “is critical to employers and our economy,” said Marti Fisher, CalChamber policy advocate. “Recent increased terrorism threats have underscored the need for immediate action on this legislation and we strongly support a long-term extension of TRIA to minimize the cost to employers from the risk of terrorism.”
The Terrorism Risk Insurance Act was a response to the inability of insurance policyholders to secure terrorism risk insurance following the attacks of 9/11. TRIA requires insurers to offer terrorism coverage to policyholders in certain commercial insurance lines.
Policyholders are free to accept or reject the offer, but terrorism coverage may not be excluded in these lines unless the policyholder has had the opportunity to purchase such coverage on the same terms, amounts and limitations applicable to other perils.
Risk Sharing
Since its enactment in 2002, the program has served as a vital public-private risk sharing mechanism, ensuring that private terrorism risk insurance coverage remains commercially available and the U. S. economy can recover more swiftly if there is a terrorist attack. The bill passed by Congress is a balance that would ensure commercial availability of coverage while increasing taxpayer protections.
In a letter to the California congressional delegation urging approval of the reauthorization, CalChamber pointed out that delays in extending the program will likely result in increased risk and costs for employers particularly with respect to workers’ compensation. Current requirements prohibit workers’ compensation policies from excluding terrorism, imposing policy limits, or excluding losses from attacks. This risk falls directly on employers, who are statutorily required to have workers’ compensation coverage for their employees.
