GlobeSt.com UPDATE: Testimony Underscores Administration's Opposition to TRIA Renewal

WASHINGTON, DC-If US Department of the Treasury John W. Snow did not make clear the department’s stance on the renewal of the Terrorism Risk Insurance Act of 2002 in his June 30 report, “Assessment: The Terrorism Risk Insurance Act of 2002,” he has done so now . Yesterday, Snow testified before the US House of Representatives Committee on Financial Services and reiterated both the Treasury Department’s and the White House’s objection to the legislation’s renewal. TRIA is scheduled to expire in less than six months on December 31, 2005.

“The findings from the surveys of insurers and policyholders point to the success of TRIA in achieving its short term goals,” Snow told the panel of US representatives, referring to studies involving commercial property and casualty insurers Treasury relied upon to complete the aforementioned report. “While we don’t ascribe a direct causal effect to TRIA, we note that insurer financial strength has improved substantially over this period. More generally, TRIA allowed both insurers and policyholders time to adjust to the post-September 11th view of terrorism risk.” Snow indicated that, as per the survey, about 66% of commercial property and casualty insurance policies written in 2004 included terrorism insurance coverage as opposed to 60% in 2002.

With regard to the impact that the failure to extend TRIA will have on the commercial real estate industry, however, many groups oppose Treasury’s position and advocate a limited renewal of the legislation to allow time to craft a long-term solution; pending bills in the House and the Senate propose a two-year renewal. “Last week’s horrific events in London are a stark reminder about the evolving nature of terrorist activity around the world, and the increasing difficulty that private insurance markets face in trying to quantify and price the risk of terrorism–let alone bear the resulting devastation,” Real Estate Roundtable President and CEO Jeffrey D. DeBoer tells GlobeSt.com. “This week’s hearings are an important step in the legislative process and, once concluded, should pave the way for the committees to focus on the details of how a future terrorism insurance program should look.”