RIMS continues push for TRIA extension

The Risk and Insurance Management Society (RIMS) is reaffirming its support for an extension of the Terrorism Risk Insurance Act (TRIA).
Currently a bill is before the U.S. Senate which would extend the government’s terrorism insurance backstop for two years beyond its December 31, 2005 sunset. RIMS says Congress should pass this extension as soon as possible.
“RIMS’ member companies, which include 84% of the Fortune 500 corporations, are concerned about the capacity of workers’ compensation and property/casualty insurers to underwrite terrorism coverage without a federal backstop in place,” notes a RIMS release. “As a reinsurance backstop, TRIA opens commerce by quantifying the maximum loss exposure so that insurers and reinsurers can operate their businesses prudently.”
Insurers are reluctant to take on terrorism risk with no ability to quantify or cap potential losses.
RIMS says the coverage is critical for commercial enterprises, and notes that member companies with a concentration of workers in one location in particular had trouble purchasing workers’ compensation coverage following the September 11, 2001 terrorist attacks and prior to TRIA’s enactment.
“RIMS is concerned that the stable reinsurance market that policymakers anticipated when they determined a timeline for TRIA does not yet exist. Because of a variety of other market-driven losses, the current reinsurance market is not stable, and will not be able to fully assume the risk of terrorism, which is extremely difficult to predict or price.”
RIMS says that while the TRIA program should be extended, other solutions will need to be found on a long-term basis and it welcomes a provision in the legislation put forward which would see the Treasury Department providing Congress with options for long-term solutions to terrorism insurance availability and affordability.