Pryce Supports House Passage of TRIA Extension

September 19, 2007

Reiterates Concern that Lengthy 15- Year Extension Insulates Program from Oversight and Improvement

Washington, DC – Congresswoman Deborah Pryce (R-Columbus), Ranking Member of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the House Financial Services Committee, released the following statement after the House passed H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act, sponsored by Representative Michael Capuano (D-MA):

“While today’s bill is not perfect, the program it is reauthorizing is necessary and working. Al-Qaida did not choose the twin towers among its targets in a vacuum. They were glaring symbols of America’s miraculous economy and competitive hegemony in the global market, and when they fell, Al-Qaida assumed devastation to both our financial markets, and to our spirit. They were wrong.

“While it will take generations before Americans absolve themselves of their grief from 9/11, America’s insurance industry recovered quickly, and will be guaranteed perseverance, thanks in no small part to TRIA. Under TRIA, the terrorism insurance marketplace continues to strengthen, expand, and manage an increasing level of exposure – precisely what Congress envisioned when it passed the bill the first time.

“The bill has been improved substantially during the committee process, and now better protects regional and small insurers, allows for nuclear biological chemical and radiological coverage free from government price controls, and treats long-term terrorism reserves sensibly. However, I remain concerned with the duration of the TRIA extension. A fifteen-year extension fails to force the hand of Congress to routinely reassess the effectiveness of the program, and objectively re-evaluate the program in light of both the growing terrorism insurance market and the evolving terrorist threat.”

TRIA was created in the wake of the September 11, 2001, when America suffered $32 billion in insured losses. It 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.

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.

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