Terrorism Risk Insurance Program Reauthorization Act set to expire

International Terrorism remains a continued risk 13 years since Sept. 11

English: United Airlines Flight 175 crashes into the south tower of the World Trade Center complex in New York City during the September 11 attacks (Photo credit: Wikipedia)

The year-end expiration of the federal Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), and its uncertain future, is creating capacity and pricing issues for terrorism insurance buyers, according to the Insurance Information Institute (I.I.I.).

“The 13-year anniversary of the September 11, 2001, terrorist attack—coming just ahead of TRIPRA’s loomingDecember 31 expiration date—is a reminder of the urgent need for Congress to swiftly reauthorize this vital Act, which has proven itself to be a critical component of the country’s national economic security infrastructure,” explained Dr. Robert Hartwig, CPCU, economist and president of the I.I.I.  “Moreover, recent and explicit threats to American interests around the world from new terrorist organizations, including Islamic State (ISIS), demonstrate that the need for the program is greater than at any time in the past several years,” he added.

Dr. Hartwig also pointed out that TRIPRA is sound fiscal and economic policy. “TRIPRA costs taxpayers virtually nothing, yet it continues to provide tangible benefits to the U.S. economy in the form of terrorism insurance market stability, affordability and availability,” he explained. “The availability and pricing of terrorism insurance is currently tightening given uncertainty over reauthorization, and because of the unique nature of terrorism risk and the possibility for virtually unlimited losses, private insurance markets do not have the capacity to cover terrorism losses to the extent possible under TRIPRA.”

Dr. Hartwig noted that, in the absence of TRIPRA, terrorism risk insurance would be less available to businesses of all sizes who want, and need, these policies. “Without the federal government’s insistence that insurers make terrorism coverage available to all who want it, terrorism risk insurance policies will be more costly and/or limited in scope,” he warned. “TRIPRA is a critical part of the U.S. economy’s security infrastructure and would ensure a swift recovery in the event of significant terrorist attack.”

In the wake of the terrorist attacks of September 11, 2001, terrorism risk insurance quickly became either unavailable or very expensive. Congress reacted by passing the Terrorism Risk Insurance Act in 2002, which provides an assurance of government support after a catastrophic attack. This has helped keep terrorism risk insurance available and affordable for businesses.

For property/casualty insurers and reinsurers, the impact of the 9/11 terrorist attacks was substantial, producing insured losses of about $32.5 billion, or $42.9 billion in 2013 dollars—the largest insurance loss in global history at the time. Losses were paid out across many different lines of insurance, including property, business interruption, aviation, workers compensation, life and liability.

A total of 2,976 people perished in the September 11, 2001, terrorist attacks in New York, Washington, D.C., andPennsylvania, excluding the 19 hijackers. Total insured losses (including liability losses) from the terrorist attacks on the World Trade Center and the Pentagon were about $39.4 billion (in 2009 dollars), including property, life and liability insurance claim costs. The total loss does not include the March 2010 settlement of up to $657.5 million announced by New York City officials and plaintiffs’ lawyers, which was designed to compensate about 10,000 workers whose health was damaged during the rescue and cleanup at the WTC. (Loss estimates may differ from estimates calculated by other organizations.)

THE TWENTY MOST COSTLY TERRORIST ACTS BY INSURED PROPERTY LOSSES
(2013 $ millions)

(1) Includes bodily injury and aviation hull losses. Updated to 2013 dollars by the Insurance Information Institute using the U.S. Bureau of Labor Statistics CPI Inflation Calculator.
(2) Differs from inflation-adjusted estimates made by other organizations due to the use of different deflators.
Source: Swiss Re.

With TRIPRA scheduled to expire at the end of 2014, both houses of Congress have been discussing legislation that would set out the federal government’s involvement in funding potential terrorism losses. In July, the Senate passed a bipartisan seven year TRIA reauthorization bill (S. 2244) by a vote of 93.4, but the House did not take up its version of a TRIA reauthorization bill before the August recess. Prospects are increasing that the issue of TRIA’s reauthorization will not be resolved until the Lame Duck session after the 2014 election.

RELATED LINKS

• White Paper: Terrorism Risk: A Constant Threat – 2014
• Presentation: Terrorism Risk & Insurance Update
• Issues Update: Terrorism Risk and Insurance
• Facts and Statistics: Terrorism
• Video: Dr. Hartwig Speaks About Terrorism Risk Insurance at Ground Zero (May 2011);Ten Years Later: Insurance Impact of 9/11

The I.I.I. has a full library of educational videos on its You Tube Channel. Information about I.I.I. mobile apps can be found here.

THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.

Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org

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SOURCE Insurance Information Institute

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rayhanania

Op-Ed writer, author, radio host, podcaster at The Arab Daily News

RAY HANANIA — Op-Ed writer, author, radio host, podcaster

Ray Hanania is an award winning political and humor columnist who analyzes American and Middle East politics, and life in general. He is an author of several books.

Hanania covered Chicago Politics and Chicago City Hall from 1976 through 1992 at the Daily Southtown and the Chicago Sun-Times. He began writing in 1975 publishing The Middle Eastern Voice newspaper in Chicago (1975-1977). He later published “The National Arab American Times” newspaper (2004-2007).

Hanania writes weekly columns on Middle East and American Arab issues as Special US Correspondent for the Arab News ArabNews.com, at TheArabDailyNews.com, and at SuburbanChicagoland.com. He has published weekly columns in the Jerusalem Post newspaper, YNetNews.com, Newsday, the Orlando Sentinel, Houston Chronical, and Arlington Heights Daily Herald.

Hanania is the recipient of four (4) Chicago Headline Club “Peter Lisagor Awards” for Column writing. In November 2006, he was named “Best Ethnic American Columnist” by the New American Media. In 2009, Hanania received the prestigious Sigma Delta Chi Award for Writing from the Society of Professional Journalists. He is the recipient of the MT Mehdi Courage in Journalism Award. He was honored for his writing skills with two (2) Chicago Stick-o-Type awards from the Chicago Newspaper Guild. In 1990, Hanania was nominated by the Chicago Sun-Times editors for a Pulitzer Prize for his four-part series on the Palestinian Intifada.

His writings have also been honored by two national Awards from ADC for his writing, and from the National Arab American Journalists Association.

Hanania is the US Special Correspondent for the Arab News Newspaper, covering Middle East and Arab American issues. He writes for the Southwest News newspaper group writing on mainstream American issues.

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