Federal Law Has Kept Terrorism Risk Coverage Affordable, Available, Says New I.I.I. White Paper

FOR IMMEDIATE RELEASE
New York Press Office: (212) 346-5500; media@iii.org

 

NEW YORK, March 24, 2014 — The Insurance Information Institute (I.I.I.) released today its updated white paper on the effect of Terrorism Risk Insurance Act (TRIA) in stabilizing the pricing and availability of terrorism insurance coverage since its enactment in November of 2002.

With the expiration of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) approaching at the end of 2014 in mind, Terrorism Risk: A Constant Threat – Impacts for Property/Casualty Insurers explores whether terrorism risk can be managed entirely within the private sector.

 

“The war on terror is far from over, as last year’s Boston Marathon bombings and other events around the world attest, but TRIA by all objective measures is now a proven and unqualified success,” stated Dr. Robert Hartwig, president of the I.I.I. and an economist. “The program not only succeeded in restoring stability to the country’s vital insurance and reinsurance markets in the years immediately following 9/11, but it continues more than a decade later to deliver substantive, direct benefits to millions of businesses, workers, consumers and the overall economy—all at essentially no cost to taxpayers.”

 

“Upwards of 60 percent of businesses purchased terrorism coverage nationally in 2012, up from 27 percent in 2003, the first full year of the program. Industries responsible for much of the country’s critical infrastructure such as power and utilities, telecommunications and health care, along with financial institutions and local government have take-up rates that approach or exceed 70 percent. Moreover, the take-up rate for workers compensation is effectively 100 percent, meaning that every worker in America is protected against injuries suffered as the result of a terrorist attack,” Dr. Hartwig added.

 

Prior to 9/11, terrorism insurance coverage was included as a part of the package in standard U.S. commercial insurance policies. Today, terrorism coverage is generally offered separately at a price that more adequately reflects the risk. TRIA was enacted by Congress in 2002 to provide a backstop for incurred losses resulting from certain acts of terrorism, and TRIPRA became law in 2007.

 

“TRIA protects the American economy and provides certainty in the insurance marketplace. We support this important partnership between the government and private sector as a means of managing the terrorism risk that our country faces,” said Eric Smith, president & CEO of Swiss Re Americas.

 

“TRIA has proven effective in balancing the challenges of terrorism risk, national security and economic stability. It provides an important foundation for orderly economic recovery following a catastrophic terrorist attack on U.S. soil,” Mr. Smith added.

 

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