Following the terrorist attacks of September 11, 2001, insurers backed out of the terrorism insurance market place prompting Congress to create a federal reinsurance backstop program in the Terrorism Risk Insurance Act of 2002 which also mandated that insurers make terrorism coverage available along with its property and casualty lines. In Dec. 2005, Congress passed the Terrorism Risk Insurance Extension Act (TRIEA), which extended the federal terrorism insurance backstop program for an additional two years. On Dec. 26, 2007, just days before the Act was once again set to expire, President Bush signed H.R. 2761 into law to extend the program for an additional seven years through the end of 2014. Unfortunately, the 113th Congress did not reauthorize TRIA before its term ended, resulting in its expiration at the end of 2014 and a brief gap in the program at the beginning of 2015. The 114th Congress acted quickly upon reconvening in January 2014 though, passing H.R. 26, the Terrorism Risk Insurance Program Reauthorization Act of 2015 in its first week in session, which reauthorizes the program for six years, through 2020. The President signed this bill into law on January 12, 2015.
What's At Stake
American businesses continue to rely upon the availability and affordability of terrorism risk insurance. The federal backstop program is a critical component of the private/public partnership created to protect the nation’s business sector by ensuring that adequate insurance coverage is available to effectively manage economic risks. This is has been a particular concern for those in commercial real estate who need to have terrorism coverage in place in order to secure financing. Commercial mortgage-backed security (CMBS) borrowers face the threat of default and bond downgrades without adequate coverage. In the retail and multifamily sectors specifically, a jump in terrorism insurance premiums can reduce the value of commercial properties. If terrorism insurance becomes unavailable again this throws the financing into technical default.
What NAR is Doing
Because of the importance of terrorism insurance coverage to commercial real estate, NAR supports the continued availability and affordability of coverage made possible by the federal backstop program of the “Terrorism Risk Insurance Act of 2002” and its extensions. Unfortunately, despite a bipartisan reauthorization bill, the United States Senate failed to renew the Terrorism Risk Insurance Act (TRIA) due to non-TRIA related provisions in the legislation. NAR continued to advocate for the program’s reauthorization, and as its first act of legislative business in 2015 the House passed H.R. 26, the Terrorism Risk Insurance Program Reauthorization Act of 2015 by a vote of 416-5, which reauthorizes the program for six years, through 2020. The Senate quickly followed suit (approving the bill by a vote of 93-4), and the President signed this bill into law on January 12, 2015. Please visit our Political Advocacy page for more information about our advocacy efforts.
How to Get Involved
REALTORS® can get involved today by staying informed on TRIA and NAR’s policy supporting terrorism insurance coverage: