What will happen to TRIA?
Eliminating the distinction between foreign and domestic terrorist attacks
under a federal terrorism insurance program was a focus of testimony at a field
hearing held in New York on Monday March 5, 2007 by the House Financial Services
Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
In addition, witnesses at the hearing stressed that any new program should steer
clear of temporary solutions and institute a long-term—if not permanent—program
to replace the expiring backstop created by the Terrorism Risk Insurance Act,
which is set to expire on Dec. 31.
New York Mayor Michael Bloomberg in testimony noted that TRIA should no longer
discern between acts of terrorism committed on behalf of foreign or domestic
interests, because this distinction becomes complicated when a domestic group
contains at least one member from another country or maintains contact with
other terrorism groups around the world. He noted the 2005 attacks on London’s
mass transit system—which were carried out by homegrown terrorists—as an example
of the type of event that would be excluded under the current backstop.
In addition, terrorism coverage for only conventional types of weapons such as
explosives is insufficient and TRIA must be expanded to respond to all possible
kinds of attacks, Mr. Bloomberg said. "We must not only be prepared for
yesterday’s attack," he said.
Sen. Charles Schumer, D-N.Y., in his testimony outlined four major points for
lawmakers to consider in drafting a new TRIA bill: the extension should be
permanent or, at the very least, last for no less than 15 years; the legislation
should provide for coverage of nuclear, biological, chemical and radiological
threats; there should be sufficient insurance capacity for densely populated
areas that are deemed high-risk; and lawmakers should move quickly on the issue.
Congress should also consider permitting tax-deferred reserving for insurers to
create a dedicated pool of capital for terrorism insurance, added Eric Dinallo,
acting New York state insurance superintendent.
Subcommittee member Rep. Deborah Pryce, R-Ohio, said, "we’re committed to
extending TRIA this year." Rep. Carolyn Maloney, D-N.Y., noted that lawmakers
are looking at drafting a new TRIA bill as early as April.
Others who testified included: Donald J. Bailey, chief executive officer of
Willis North America; Edmund F. Kelly, chairman, president and CEO of Liberty
Mutual Group Inc.; Robert W. Ferguson, chairman of Swiss Re America Holding
Corp.; Warren Heck, president and chief executive officer of Greater New York
Mutual Insurance Co.; and representatives of World Trade Center Properties L.L.C.
and S.L. Green.
by Rupal Parekh
