The U.S. Treasury Department has decided to extend the “make available” provisions of the Terrorism Risk Insurance Act through 2005.[@@]
TRIA requires the federal government to cover up to $90 billion in terrorism-related losses if terrorism-related losses in a given year exceed $10 billion. The make available sections require insurers to include terrorism coverage provisions in their commercial property-casualty policies that are similar to the coverage provisions for other risks.
TRIA also requires the Treasury Department to conduct a study of the effectiveness of the act by June 2005.
The program is set to expire at the end of 2005, and TRIA gives Treasury Secretary John Snow the authority to kill the make available provisions early if he finds that they are ineffective or unnecessary.
Snow says he believes that the TRIA program has helped the country recover from the recession and the effects of the Sept. 11, 2001, terrorist attacks. Almost 200 members of the public have commented on TRIA, and most of the comments support the argument that the make available provisions have helped increase the availability, flexibility and affordability of terrorism coverage, Snow says.
But Snow says the Treasury Department should wait for the results of the effectiveness study before deciding whether to extend the TRIA program either temporarily or permanently.
“By extending the make available provision, we ensure that our overall evaluation of the program’s success is based on information and assumptions that are consistent and that there’s no changing of the rules in the middle of the game,” Snow says in a statement about the program extension.
The American Council of Life Insurers, Washington, has been lobbying for Congress and the Bush administration to extend TRIA protection to group life policies. Snow does not mention group life in the TRIA extension statement.
The Coalition to Insure Against Terrorism, Washington, a group for real estate investment trusts and other organizations that insure large amounts of commercial property against terrorism, is praising Snow’s extension of the TRIA make available provisions and calling for Congress to extend the entire program through the end of 2007.
“Although terrorism insurance coverage is now generally available and more affordable than prior to TRIA’s enactment, we see no significant evidence that the private market can function well in the absence of such a backstop,” CIAT spokesman Martin DePoy says in a statement.