Insurance industry players testify at government committee for reauthorization of TRIA

An executive from Marsh & McLennan Companies was among the industry representatives testifying before the United States House of Representatives, arguing for the reauthorization of the Terrorism Risk Insurance Act (TRIA).

Peter J. Beshar, executive vice president and general counsel of Marsh & McLennan, testified Thursday and said his organization supports the reauthorization and modernization of the act, which is set to expire Dec. 31, 2014.

“We consider TRIA to be a model public-private partnership,” he said. “TRIA restored insurance capacity at a critical time after 9-11 and continues to be the backbone of a healthy terrorism insurance market.”

“In our judgment, the existence of a private terrorism insurance market, backstopped by TRIA, actually serves to protect the government and taxpayers from absorbing virtually all of the financial loss in the event of a terrorist attack,” he added.

Other industry leaders testifying before the House’s Financial Services Committee included Eric Smith, president and CEO of Swiss Re America and Dr. Gordon Woo, a catastrophist at Risk Management Solutions (RMS).

According to a report released by Marsh in April, 62% of its clients purchased property terrorism coverage backed by TRIA in 2012. “Our clients across the United States – including real estate developers, media companies, healthcare organizations and educational institutions – need and want terrorism coverage and would be less likely to get it without TRIA,” Marsh says.

In addition to testifying before the House committee, Marsh also offered three recommendations for refinement of the program including:

• Specific clarification that coverage is provided by TRIA for all forms of terrorism – including nuclear, biological, chemical and radiological events – if coverage is afforded on the primary policy.
• Modernization of TRIA to reflect new terrorist threats that have emerged – in particular, the risk of cyber terrorism.
• Establishment of a 90-day time period for determining whether or not an act of terrorism is covered by TRIA.

On Wednesday, representatives of Marsh & McLennan Companies, including Guy Carpenter, also shared their views on TRIA’s reauthorization with the U.S. Federal Insurance Office.