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Congress Needs to Renew TRIA ASAP

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With so little getting done in Washington these days, manufacturers are encouraged that leaders in the House of Representatives believe they will vote on reauthorizing the Terrorism Risk Insurance Act (TRIA) when Congress returns after the election. First passed in the wake of the 9/11 attacks, TRIA provides a federal backstop for the insurance market in the event of a catastrophic terrorism attack, with a mechanism to recoup any federal outlays from policyholders overtime. This public-private risk-sharing mechanism has allowed the private insurance market to provide commercial terrorism coverage for manufacturers and has broad bipartisan support, with the Senate voting 93-4 to reauthorize TRIA for another 7 years.

TRIA is set to expire on December 31 and manufacturers are already seeing disruptions in the marketplace. Uncertain about the program’s future, insurers are delaying renewal policies or adding “sunset” endorsements to exclude terrorism coverage in the event of TRIA’s expiration. For workers’ compensation, where exclusions and sunset clauses are prohibited by law, insurers are limiting their exposure by raising rates and could withdraw from the market altogether, which would force manufacturers to obtain coverage at a higher cost. Passing a stop-gap extension of TRIA only prolongs this uncertainty and destabilizes the market.

Manufacturers know that uncertainty is bad for business and prevents growth.  Without the ability to plan for future costs, companies delay purchasing new equipment and hiring new workers. Members of Congress understand this and proposals to reauthorize TRIA in the House range from 5-10 years. With December 31 right around the corner, Congress needs to act.


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