Pryce Lauds TRIA Extension During Subcommittee Hearing

April 25, 2007

Pryce Lauds TRIA Extension During Subcommittee Hearing

Washington , DC – Today, Congresswoman Deborah Pryce (R-Columbus) strongly endorsed the extension of the Terrorism Risk Insurance Act (TRIA), legislation passed in the wake of 9/11 to create a federal backstop of coverage to safeguard our nation’s insurance industry from financial devastation in the event of another catastrophic terrorist attack. Pryce serves as Ranking Member of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the House Financial Services Committee, which held hearings today on policy options for TRIA’s extension.

Said Pryce at the hearing, “TRIA has been a proven success, and has helped to create a healthier insurance market. It has provided American consumers and businesses with the necessary protection against terrorist attacks, and has ensured the continued availability of insurance to protect our economy and job growth.”

“Since TRIA’s enactment, the insurance market has reacted precisely how Congress hoped it would – diversifying itself and developing enough private capital so that the federal government can ultimately leave the market,” Pryce added. “The private insurance marketplace is becoming increasingly capable of managing an increased level of exposure, and with the right combination of TRIA reforms such as tax reserving, regulatory reform, and the expansion of the Risk Retention Act, the terrorism insurance marketplace will continue to strengthen and expand.”

Today’s hearing, entitled, “Policy Options for Extending the Terrorism Risk Insurance Act,” sought to discuss possible changes in the TRIA program in anticipation of marking up legislation in the next two months. Last Congress, the House overwhelmingly passed a bipartisan extension of TRIA, but the Senate failed to act upon the House bill, and instead passed a limited extension.

The September 11, 2001 terrorist attacks caused over $32 billion in insured losses, one of the costliest events in insurance history. Insurers had not been charging separate terrorism premiums and immediately withdrew from the marketplace to reevaluate their risk exposure. TRIA was enacted as a temporary backstop to ensure the availability of terrorism coverage and provide a transitional period for insurers to rebuild their surplus, model and diversify their terrorism risk exposure, and develop new policy forms charging for terrorism risks. Insurers’ surplus is now at record levels and most insurers have diversified their terrorism exposure. However, it remains difficult to price the likelihood or potential severity of a terrorist attack, and insurers remain reluctant to cover high level terrorism risks without a Federal backstop.

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