AIA: Momentum Grows to Extend Terrorism Insurance Law
New legislation authored by several House Democrats to extend the Terrorism Risk Insurance Act of 2002 (TRIA) demonstrates strong, bipartisan congressional support for keeping TRIA's temporary, yet vital, economic safety net fully in place while long-term solutions are being evaluated, the American Insurance Association (AIA) said Thursday.
TRIA secures virtually every sector of the U.S. economy against catastrophic terrorist attacks by making sure that businesses of all sizes and types can purchase commercial insurance that covers losses resulting from terrorist attacks.
'Momentum is building on both sides of the political aisle and on both sides of Capitol Hill to extend TRIA this year,' Leigh Ann Pusey, AIA's senior vice president of government affairs, said. 'The House majority's 'Terrorism Insurance Backstop Extension Act of 2004' (HR 4634) and the Democrats' bill (HR 4772) clearly show that members of Congress want to devote significant energy to this issue this year.'
According to AIA, TRIA is a three-year, public-private risk sharing mechanism that has worked well, enabling the commercial insurance marketplace to function even though the very real threat of further catastrophic terrorism remains."
While extending TRIA is crucial to get the marketplace stabilized for the long haul, there may be a new risk on the horizon. By purchasing Terrorism Risk Insurance, REIT's and other property owners may think they are off the hook when it comes to hedging this specific type of risk. Nothing could be farther from the truth. Without clear evidence that landlords are preparing their tenants and staff for potential loss events of any magnitude, they face one of the greatest of Operational Risks. Legal Liability and loss of reputation. There is much more to the mosaic of risk management than just purchasing an insurance policy. Let's just hope that those entities involved are encouraging their respective staff and tenants to become more proactive, preventive and relevant when it comes to their critical infrastructures Operational Risk Management.