Federal Terrorism Program Set to Expire in Mere Days
With the elections now over, workers’ comp insiders are hoping Congress will soon address the impending end of TRIA. The federal government’s terrorism insurance backstop program is set to expire Dec. 31. But the effects are already being felt.
“The question of what happens if the federal Terrorism Risk Insurance Program Reauthorization Act is not renewed by Congress is no longer a theoretical one,” wrote Robert Hartwig, president of the Insurance Information Institute. “Since insurance policies negotiated during 2014 extend beyond the imminent December 31 expiration date of the program, the negative consequences of non-renewal are already being experienced by businesses across America and their insurers.”
“Each day Congress delays reauthorization, our economy is left more vulnerable to the devastating consequences of terrorism.” — Marty DePoy, Coalition to Insure Against Terrorism spokesman
In a new paper outlining the potential consequences of the program’s end, Hartwig said the workers’ comp system would be especially hard hit. “Many organizations with large concentrations of employees are experiencing significant pressure on their workers’ compensation insurance programs as uncertainty mounts over the future of TRIPRA. Issues range from price increases to the possibility that their insurer will not renew their coverage,” Hartwig wrote. “Because insurers cannot exclude terrorism-related workers’ compensation losses and employers are required to buy it, Marsh says the options available to buyers have been reduced and rates have increased.”
Hartwig said the demise of the program would render national security more vulnerable since the take-up rate for terrorism insurance would likely fall and leave the economy “less resilient to future terrorist attacks.” Another concern is that a major terrorist attack would increase demand for federal aid because of reduced private sector availability of terrorism insurance.
“The consequences of allowing the federal terrorism risk insurance program to expire is potentially debilitating for businesses, a negative for job growth, and will lead to negative economic consequences for the broader economy,” Hartwig said.
The effort to continue the program got a boost during the recent annual meeting of the Property Casualty Insurers Association of America. Former Defense Secretary Robert Gates said failure to renew the law would be a “huge mistake.”
Gates’ comments won praise from the Coalition to Insure Against Terrorism. The group represents businesses and organizations in the real estate, manufacturing, utility, construction, transportation, entertainment, and retail sectors.
“Former Secretary Gates is right; terrorism is a tragic fact of life, and we must extend the law that serves as a critical tool in our nation’s fight against these threats,” said CIAT spokesman Marty DePoy. “Each day Congress delays reauthorization, our economy is left more vulnerable to the devastating consequences of terrorism. When members return to Washington … they must reauthorize this critical law.