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State lawmakers push for reauthorization of federal terrorism risk insurance
TIFFANY L. PARKS
Special to the Legal News
Published: May 21, 2013
A bipartisan resolution that landed in the General Assembly in late April is urging Congress to reauthorize the federal terrorism risk insurance program.
House Concurrent Resolution 17, sponsored by Reps. Michael Stinziano, D-Columbus, and Robert Hackett, R-London, states that Congress originally passed the Terrorism Risk Insurance Act in response to the Sept. 11, 2001 terrorist attacks.
“Congress should reauthorize the federal Terrorism Risk Insurance Program that provides terrorism reinsurance so that insurers can maintain stability in the insurance and reinsurance markets and continue to deliver substantive and direct benefits to businesses, workers and consumers,” Stinziano and Hackett said in a joint statement.
Stinziano said the act is needed to provide businesses with market stability and help prevent economic losses in the event of a terrorist attack.
“Terrorism is a real threat, unfortunately, and we need to show our support for insurers and reinsurers to be able to help people,” he said.
In passing the act in 2002, the federal government agreed to provide terrorism reinsurance to insurers.
The arrangement was extended in 2005 and the Terrorism Risk Insurance Program Reauthorization Act, also known as TRIPRA, came about in 2007.
Under TRIPRA, the federal government provides such reinsurance when industry-wide losses because of terrorism attacks reach $100 million.
“After an insurer has reached that threshold, the insurer pays 15 percent of the residual losses and the federal government pays the remaining 85 percent,” the statement from Hackett and Stinziano read. “Without the existing federally-provided reinsurance program, insurers would no longer provide coverage for losses that are caused by acts of terrorism, thus potentially causing a dramatic blow to businesses and our economy.”
HCR 17 states that insurance helps protect the U.S. economy from the “adverse effects of the risks inherent in economic growth and development while also providing the resources necessary to rebuild physical and economic infrastructure, offer indemnification for business disruption and provide coverage for medical and liability costs from injuries and loss of life in the event of catastrophic losses to persons or property.”
The resolution goes on to say the Sept. 11 attacks produced insured losses larger than any natural or man-made event in history with claims paid by insurers to policyholders eventually totaling around $32.5 billion.
“The sheer enormity of the loss combined with the possibility of future attacks produced financial shockwaves that shook insurance markets,” HCR 17 states. “The lack of terrorism risk insurance contributed to a paralysis in the economy. Without a program such as TRIPRA, many of our citizens who want and need terrorism coverage to operate their businesses all across the nation would be either unable to get insurance or unable to afford the limited coverage that would be available.”
HCR 17 is co-sponsored by Reps. Cheryl Grossman, R-Grove City, and Dale Mallory, D-Cincinnati.
The bill is before the House Insurance committee.
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