(Washington, DC) - Legislation championed by U.S. Congressman Gary Ackerman (D-NY) to extend the federal government’s terrorism insurance program by 15 years—a measure critical to rebuilding Ground Zero—was passed late today by the House Financial Services Committee. The measure was approved despite fierce opposition from Members of Congress who had instead argued for a shorter extension. The 15-year renewal of the program, known as the Terrorism Risk Insurance Revision and Extension Act (TRIREA), is expected to be taken up by the full House of Representatives this fall, and is considered likely to pass.

After the 9/11 attacks, many insurance companies eliminated terrorism insurance from their policies, judging the potential losses from a major terrorist attack to be too great to insure against. In response, Congress passed the Terrorism Risk Insurance Act (TRIA), which created an insurance backstop from the federal government to protect against catastrophic terrorism-related loses. The measure was extended for two years in 2005 and expires at the end of this year.

Ackerman, a senior member of the Financial Services Committee—the panel with jurisdiction over TRIA’s reauthorization—has been a key figure in moving the legislation and has been at the forefront of efforts to win an extended reauthorization of the program, instead of another short-term extension. The bill contains a vital bipartisan compromise, known as the "reset mechanism," that was negotiated by Ackerman and is considered vital to the bill's prospects for becoming law. Under the agreement Ackerman helped craft, the bill will extend lower trigger levels and lower deductibles nationwide in the event of a catastrophic event with insured losses exceeding $1 billion. Under this compromise, in the event of more than $1 billion in loses, the deductibles for any insurance company that pays out losses due to an attack would immediately be lowered to 5 percent, while the nationwide trigger for any insurer for any future event would drop to $5 million. Ackerman also reached agreement with Republicans to extend these provisions when the total losses of two or more attacks that occur in the same geographical area in the same year exceed $1 billion.

“Failure to extend TRIA would be an absolute disaster because without terrorism insurance, banks will not lend money and developers at Ground Zero and other sites will simply not be able to build” said Ackerman. “Failure to rebuild at the former World Trade Center site, or any other spot attacked by terrorists, due to a lack of available insurance would represent another victory for the despicable terrorists who attacked us on 9/11.” 

In addition to the 15-year extension, and "reset mechanism," there are numerous other new provisions in the bill to renew TRIA that are not in the current law. They include the following:

Coverage for both foreign and domestic acts of terrorism. The version presently in-place only covers foreign terrorist attacks.

Extends coverage to a nuclear, biological, chemical or radiological attack.

Contains group life insurance.

The program's trigger (the amount of property & casualty loss at which the program would kick-in) would be lowered from $100 million to $50 million.

Creates a blue-ribbon commission to develop long-term recommendations for after the extension expires.

Adds the Secretary of Homeland Security to the list of administration officials that must be consulted when the Treasury Department determines whether a given event should be certified as an act of terrorism, a provision sponsored by Ackerman.

Renewing TRIA was the subject of a Congressional hearing held at City Hall in New York City this past March. The Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises heard testimony in support of TRIA’s extension from New York Mayor Michael Bloomberg, Senator Charles Schumer (D-NY) and a panel of leading developers, insurers, reinsurers and real estate investors. The hearing, attended by several New York Congressmembers, was chaired by Ackerman, who substituted for Chairman Paul Kanjorski (D-PA).

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