Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) recently opened the first full committee hearing on the Terrorism Risk Insurance Act of 2002 since 2005.
“This is a program that is due to expire in 15 months and there are many within our economy that rely on this program and need to know what the will of Congress is,” Hensarling said. “I would also note that roughly half the members of our committee were not in Congress when this subject was debated. So I hope there will be a multitude of views presented today on the topic in this hearing.”
The goal of the original TRIA was to “create a temporary industry risk spreading program for foreign acts of terrorism” and “facilitate a transition to a viable market for private terrorism risk insurance.”
“At the time it was a thought that originally the TRIA act would give the insurance industry time to re-capitalize and develop new models that they could price for terrorism risks and increase industry capacity,” Hensarling said. “Three years later in 2005 Congress decided to make TRIA a little less temporary and extended it for two years. In 2007, Congress was back again to stretch the boundaries of modern linguistics by extending TRIA temporarily for seven additional years and expanding it to cover any acts of terrorism, foreign or domestic. So we all must recognize that in just five years TRIA has leapt in scope and quadrupled in length, neither of which I think could be mistaken for facilitating a transition to a viable market for private terrorism risk insurance.”
Hensarling said that several questions about the TRIA needed to be answered, including what constitutes a temporary program and if the past 11 years have given the insurance industry time to successfully model and provide programs for terrorism coverage without taxpayer support.