GlobeSt.com UPDATE: Treasury Comes Out Against Terrorism Insurance Legislation Extension

WASHINGTON, DC-The US Department of the Treasury has issued its report, “Assessment: The Terrorism Risk Insurance Act of 2002,” to much controversy. As per the study, the Treasury finds no legitimate reason to extend the legislation beyond its scheduled expiration date of December 31, 2005.

Passed in response to the effects the September 11 terrorists attack had on the insurance industry and insurance policyholders such as real estate owners, TRIA established a backstop measure in which the government would cover payouts exceeding $100 billion of insurers’ annual liability in the event of another terrorist attack. According to a November 2004 study by the RAND Institute for Civil Justice, the attacks resulted in $38.1 billion in insured losses–to persons and businesses–with insurers making $19.6 billion of those payments.

“Overall we find that TRIA was effective in terms of the purposes it was designed to achieve,” Treasury officials note in the document. “TRIA provided a transitional period during which insurers had enhanced financial capacity to write terrorism risk insurance coverage. While we don’t ascribe a causal effect, during this period insurers began pricing for terrorism coverage and insurer financial strength improved.” Treasury officials continued saying TRIA provided “an adjustment period” for both insurers and policyholders. “TRIA’s effectiveness for these purposes does not imply continuation of the program.”