The Congressional Budget Office focuses mainly on property-casualty coverage in an analysis of the cost of dropping the federal terrorism reinsurance program.[@@]
The current Terrorism Reinsurance Act program is set to expire at the end of the year.
CBO analysts argue that the cost of scaling back the TRIA program when it expires “is likely to be small” and that eliminating the program could result in “gains in economic efficiency.”
The analysts do not discuss the merits of including group life insurers in the TRIA program.
The analysts refer briefly to group life insurers in a section that states that group life accounts for about $100 million of the $1.5 billion in expected average annual losses that are subject to TRIA coverage.
Julie Rochman, an official at the American Insurance Association, Washington, says the fact that the CBO analysts minimize the cost of letting the TRIA program die is “disappointing.”
Rochman objects to a CBO suggestion that an increase in terrorism insurance costs could cause property owners to work harder to avoid terrorism losses.
“Our experience is that terrorism risk is so unique that traditional loss control or mitigation techniques are not applicable,” Rochman says.
The Senate Banking Committee, the committee that asked for the CBO report, expects to hold hearings on TRIA in April.
The U.S. Treasury Department is supposed to release a TRIA program report of its own in June.