Insuring losses from a terrorist attack is an increasingly complicated task in today's challenging business and political climate. It is tough for insurers to predict both the onset and the outcome of an incident, and that makes it hard to put an accurate total on the potential damages.
As a result, the commercial insurance marketplace received significant help back in 2002 in the form of the Terrorism Risk Insurance Act, or TRIA. Created in the aftermath of the September 11 terrorist attacks, the legislation provided financial backing in the event of substantial insurance claims due to such an event. While the law was extended twice previously, it is up for expiration at the end of 2014. With that deadline looming, debate has raged on about whether or not to extend the legislation, and recently support has increased for a renewal. Specifically, this new trend is thanks to praise from many major businesses, industries and other lobbyists.
Major sports back TRIA extension
A new TRIA renewal is gaining momentum in Congress, and the recent push of support has increased the odds for the bill's extension. This is good news for many industries, including property and casualty insurance.
According to Bloomberg, the recent uptick in backing for a TRIA extension has been pushed along by the National Football League, among other substantial backers and major league sports. Many of the leaders of these organizations are worried that a large-scale terrorist attack could jeopardize their businesses, placing an increased importance on a bill such as TRIA. Thanks to their support, the chances of a renewal getting passed by Congress are on the way up.
"I give it plus-90-percent," Mark Calabria, director of financial regulation studies at the Cato Institute and former aide on the Senate Banking Committee, told the media outlet. "It benefits from the fact that there's a not a very strong coalition against it, whereas there's a very deep coalition for it."
Bloomberg reported that the NFL, Major League Baseball, the National Basketball Association and other sporting groups wrote a letter to Congress stressing the value of TRIA as a means to keep insurance costs affordable and provide effective policies for this type of risk.
Hotel industry also expresses support
Sports leagues aren't alone when it comes to supporting a TRIA renewal. In fact, many in the hotel industry are just as concerned about the possible chances of a significant terrorist attack impacting their businesses.
Recently, the American Hotel and Lodging Association issued a news release urging the Senate to pass the TRIA renewal as quickly as possible.
"In the coming weeks, the U.S. Senate has the opportunity to take an important step towards providing greater certainty for the lodging industry and the broader economy by passing crucial TRIA reauthorization legislation," said Katherine Lugar, AH&LA president and CEO. "This program has for the past 12 years provided a valuable backstop for policy holders whose terrorism coverage had become cost prohibitive or in some instances unavailable."
The new legislation is expected to be addressed by Congress in June. Details of the bill include a renewal that would last for seven more years and was introduced by a number of senators. The AH&LA letter highlighted the potential harm that could come about if TRIA was not renewed, such as the problems acquiring terrorism risk insurance and the possibility that it would be challenging to start new business and ensure economic stability.
With the increased support across the country, it is more likely that TRIA will be renewed by Congress soon. If this is the case, the property and casualty insurance industry may find it is easier to create policies tailored to the specific hazard of terrorism.