TRIA requires property and casualty insurance companies to offer terrorism coverage to American businesses – large and small — and retain the cost of all but the largest terror attacks. This provides a safety net against the economic paralysis the nation faced in 2001 and protects jobs.
Between 2013 and 2016, the economic cost of global terrorist attacks averaged $79 billion. TRIA helps make sure those losses are insured. In 2019 Congress officially passed legislation to reauthorize the Terrorism Risk Insurance Act (TRIA) for seven years as part of the 2020 fiscal spending bill. This is a tremendous victory for consumers and the American economy.
The Terrorism Risk Insurance Act (TRIA) of 2002 was passed by Congress after the terrorist attacks of September 11, 2001 on the World Trade Center, the Pentagon and Pennsylvania. These attacks produced insured losses of approximately $43.6B (adjusted for inflation), including life, property and liability claims. The sheer enormity of that loss, combined with the possibility of future attacks, produced financial shockwaves. The lack of terrorism risk insurance contributed to a paralysis in the economy.
TRIA was created to protect the American economy from future catastrophic terrorism by requiring property and casualty insurance companies to offer terrorism coverage to American businesses and to retain the cost of all but the largest terror attacks. The federal government provides a backstop to prevent serious damage to the economy if a truly catastrophic terrorism incident (larger than 9-11) occurs. If the federal government pays terrorism losses, the program allows those losses to be recouped from the marketplace meaning there will typically be no net costs to the taxpayer.
TRIA is important for the economy and jobs. Many lenders require terrorism insurance coverage, especially for commercial properties like office buildings and stadiums. But terrorism is unpredictable, and it is difficult if not impossible for insurers to assess and price terrorism risks.
TRIA offers a solution to protect. It ensures that terrorism risk insurance is available to protect our economy, and it offers a degree of economic certainty that losses would generally be recovered in the event of an attack.
Failure to extend TRIA prior to the December 2020 expiration has the potential to create serious economic disruption. Without TRIA, adequate terrorism coverage for current and future economic activity could be unavailable from private insurers. Many construction projects could be halted and many other events we all enjoy and love like sporting events, food festivals and concerts depend on TRIA.
Not extending TRIA threatens jobs and puts Americans at risk.