TRIA's Time Running Out

More Support for TRIA Extension

Reports paint chilling picture of the U.S. economy after TRIA's expiration.
By: | April 24, 2014

A pair of new reports is adding to the momentum urging Congress to extend the federal government’s terrorism backstop program. The Democratic Governors’ Association and a report by RAND both talk of chilling ramifications should the Terrorism Risk Insurance Act be allowed to expire at the end of the year.

While insurance industry representatives have been speaking to members of Congress lately, they are now being joined by other facets of the economy. Insurers, especially those in workers’ comp, are hoping Congress will act soon and extend the program.

“Workers compensation is a unique line of insurance,” said the DGA’s report, Why Reauthorizing the Terrorism Risk Insurance Act is Important for States. “If TRIA expires, it would expose state workers’ compensation insurance markets to unlimited terrorism-related claims if a terrorist event occurs, which could result in unprecedented losses and destabilize the markets.”


The report went on to quote NCCI as saying the absence of TRIA would result in increased costs and severely constrained coverage, and create difficulties for employers in meeting state regulatory requirements, possibly leading to layoffs of workers.

“By having a plan in place that covers and adjusts claims arising from a terrorist attack, the federal government creates a level of certainty that better serves taxpayers and policyholders impacted by terrorism,” the report concluded. “The private market isn’t capable of providing terrorism coverage without a federal backstop at a level that businesses need, and lack of coverage availability could result in dire consequences for the economy at a time when it’s just starting to bounce back.”

Potential national security implications are the focus of the RAND study. National Security Perspectives on Terrorism Risk Insurance in the United States was funded by insurance and business organizations.

“Examining the history of terrorism in the United States since the passage of TRIA and reviewing counterterrorism studies, the authors find that terrorism remains a real national security threat, but one that is very difficult for insurers to model the risk of,” said a statement accompanying the report. “They also find that terrorism risk insurance can contribute to making communities more resilient to terrorism events, so, to the extent that terrorism insurance is more available with TRIA than without it, renewing the legislation would contribute to improved national security.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]