House Hearing on TRIA Reauthorization
On September 19, the House Financial Services Committee held a hearing to examine the Terrorism Risk Insurance Act (TRIA) of 2002, which sunsets on December 31, 2014. TRIA was passed in the aftermath of the September 11, 2001 terrorist attacks, when insurers backed out of the terrorism insurance market, causing losses to construction and real estate. It created a federal reinsurance risk-sharing program, which requires that insurers make terrorism coverage available along with their property and casualty lines. It has been extended twice, once in 2005 for an additional two years, and again in 2007 for seven more years.
The hearing was comprised of two panels. The first panel was made up of Reps. Michael Grimm (R-NY), lead sponsor of H.R. 508, which extends TRIA for five years, Rep. Michael Capuano (D-MA), lead sponsor of H.R. 2146, which extends TRIA for ten years, Rep. Carolyn Maloney (D-NY), and Rep. Peter King (R-NY). The second panel was made up of experts from the insurance industry. The statements and questions focused on TRIA's successes in helping the economy rebound in the wake of September 11, the difficulties in modeling terrorism risk, the cost of the program to taxpayers, and whether the private insurance market has developed enough that the federal backstop provided by TRIA is no longer necessary.
Prior to the hearing, NAR sent a letter to members of the House Financial Services Committee commending them on beginning the discussion of this important issue. It also stressed the importance of this program to the nation's economic infrastructure, which provides real estate practitioners the economic certainty to more accurately predict property operating expenses and obtain financing over time.