Policy Issues
TRIA - Terrorism Risk Insurance Act

 Developing an Effective, Long-Term Terrorism Risk Insurance Program 

The Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) is scheduled to sunset on Dec. 31, 2020. 

FIO TRIP report cover x220 

Report on the Overall Effectiveness of the Terrorism Risk Insurance Program” was released June 30, 2018 by the U.S. Department of the Treasury’s Federal Insurance Office (FIO).

  • Originally enacted in 2002 in response to the inability of insurance markets to predict, price and offer terrorism risk coverage to commercial policyholders, the Terrorism Risk Insurance Act (TRIA) has been extended in 2005, 2007 and again in 2015 – following a 12-day lapse when Congress failed to complete their work on reauthorization at the end of 2014.  

  • TRIA is essential for commercial real estate as lenders require “all risk” insurance coverage – including terrorism coverage – to cover the risk of loss to the collateral.  At virtually no cost to the taxpayer, TRIA has allowed our economy to move forward even in the face of terrorist threats.  The program has been, and remains, extremely effective in achieving its primary purpose, which was to stabilize the market following 9/11 and to ensure the continued availability of terrorism coverage for commercial policyholders in the future.  (Congressional Research Service, Terrorism Risk Insurance: Overview and Issue Analysis for the 116th Congress, April 26, 2019)

  • Some insight into the effects of a lack of terrorism insurance were shown during the 14-month period between the September 2001 terrorist attacks and the November 2002 passage of TRIA.   In September 2002, a Real Estate Roundtable survey found that “$15.5 billion of real estate projects in 17 states were stalled or cancelled because of a continuing scarcity of terrorism insurance.”  Additionally, Moody’s Investors Service downgraded $4.5 billion in commercial mortgage-backed securities "citing concerns about terrorism insurance coverage."  (Roundtable News Release, Sept. 19, 2002 and Moody's, Sept. 27, 2002) 

  • On Oct. 12, 2002 President George W. Bush said, "The lack of terrorism insurance has delayed or cancelled more than $15 billion in real estate transactions. The $15 billion worth of delay has cost 300,000 jobs – jobs to carpenters and joiners, bricklayers, plumbers and other hardworking Americans." (Radio Address by the President to the Nation, White House Archives, Oct. 12, 2002)

  • With TRIA reauthorization now facing expiration at the end of 2020, the Senate Banking, Housing and Urban Affairs Committee held a hearing on June 18, 2019 on "The Reauthorization of the Terrorism Risk Insurance Program" that featured testimony from specialists from Marsh, the Congressional Research Service and Wharton.  One key finding of  Marsh’s 2019 Terrorism Risk Insurance Report is that education, health care, financial institutions, and real estate sectors had the highest ‘take-up’ rates among the 17 industry segments surveyed – all above 70%.   

  • The Coalition To Insure Against Terrorism, which includes The Real Estate Roundtable, submitted a letter to the Senate Banking Committee on June 18, 2019 urging congressional action on a long-term reauthorization of the Terrorism Risk Insurance Program. 

A June 2018 report by the Treasury’s Federal Insurance Office (FIO) entitled Report on the Overall Effectiveness of the Terrorism Risk Insurance Program concluded:  

  • Chicago buildings x200

     According to a 2002 survey by The Real Estate Roundtable, more than $15.5 billion worth of real estate projects in 17 states were stalled or cancelled because of a scarcity of terrorism insurance before TRIA was enacted.  (Roundtable news release, Sept. 19, 2002) 

    The TRIA Program generally has been effective in making terrorism risk insurance available and affordable in the insurance marketplace.
  • Treasury has not observed any aspects of the Program (either based upon the collected data or operation of the Program generally) that have had the effect of discouraging or impeding insurers from providing P&C insurance in general, or coverage for acts of terrorism specifically.

  • The Program serves as an important backstop to workers’ compensation insurance, given that under state law, workers’ compensation insurance must cover terrorism risk, is not subject to limits of liability, and cannot exclude causes of loss posing extreme aggregation risks.

  • Treasury’s estimate of total earned premiums for terrorism risk insurance from 2003 to 2017 is approximately $37.6 billion (excepting captive insurers), which is between 1 and 2 percent of the total premiums earned in the TRIP-eligible lines of insurance during that period. 
  • Maintaining TRIA is critical to protecting the economy from potentially catastrophic losses and the kind of paralysis that ensued after 9/11. It is also critical to ensuring the continued availability of credit for commercial real estate, since terrorism insurance coverage is required by lenders as part of most loan covenants.  

  • A September 2004 report, The Ecconomic Importance of Federal Participation in Terrorism Risk, was co-authored by R. Glenn Hubbard, dean of Columbia University’s Graduate School of Business and former chairman of the White House Council of Economic Advisers; and Bruce Deal, managing principal at Analysis Group, Inc., an economic, financial, and business strategy consulting firm.  The authors state that “fundamental issues specific to terrorism. . . make these risks very difficult for private insurers to fully absorb,” and that “eliminating the likelihood and location of such extreme events is virtually impossible.”

    Hubbard-TRIA-study-coverx200

      A report entitled, The Economic Importance of Federal Participation in Terrorism Risk, was released Sept. 14 , 2004 by R. Glenn Hubbard, dean of Columbia University’s Graduate School of Business and former chairman of the White House Council of Economic Advisers; and Bruce Deal, managing principal at Analysis Group, Inc., an economic, financial, and business strategy consulting firm.

  • The staggering economic impact of this market condition must not be forgotten. A Real Estate Roundtable survey about the 14-month post-9/11, pre-TRIA period revealed that more than $15 billion in real estate related transactions were either stalled or cancelled because of a lack of terrorism insurance.  The White House Council of Economic Advisors estimated that 300,000 jobs were lost due to delayed construction projects during this period, and Moody’s Investors Service downgraded $4.5 billion in commercial mortgage-backed securities (CMBS).  TRIA was intended to ensure that the economy was strong enough to withstand a future attack. That purpose remains as important today as it was in November 2002 . 
Working with the FIO, the TRIA Advisory Committee on Risk-Sharing Mechanisms (ACRSM); the insurance industry; our policyholder coalition (CIAT); and Congressional and Administration policymakers, The Roundtable is focused on developing an effective, long-term approach for a federal terrorism risk insurance program.   Such a long-term program should enable policyholders to secure the terrorism risk coverage they need without facing periodic renewals by the federal government. 

Terrorism Risk Insurance – Roundtable Weekly reference:   

 07/08/2016      Terrorism Risk Insurance 
TERRORISM RISK INSURANCE - July 8, 2016 Roundtable Weekly 
Treasury Releases Report on Terrorism Risk Insurance Program’s Effectiveness and Recommends Premiums Be Retained for Future Claims   A “Report on the Overall Effectiveness of the Terrorism Risk Insurance Program” released June 30 by the U.S. Department of the Treasury’s Federal Insurance Office (FIO) ....  

 06/03/2016      Capital and Credit;Terrorism Risk Insurance
TERRORISM RISK INSURANCE - June 3, 2016 Roundtable Weekly 
Coalition to Insure Against Terrorism Details Concerns Over Proposed TRIA Changes 

 01/16/2015      Terrorism Risk Insurance
TERRORISM RISK INSURANCE - January 16, 2015 Roundtable Weekly 
Six-Year TRIA Renewal Becomes Law After President’s Signature and Overwhelming Bipartisan Passage by House and Senate 

 01/09/2015      TRIA - Terrorism Risk Insurance Act;Terrorism Risk Insurance
TERRORISM INSURANCE - January 9, 2015 Roundtable Weekly 
Over 1 Million Businesses Breathe a Sigh of Relief as Congress Votes to Reinstate, Extend TRIA; Roundtable Applauds Lawmakers’ Swift, Decisive Action; Obama’s Signature Expected Soon       

Note: Various Capital and Credit policy issues can be found in recent issues of Roundtable Weekly — our weekly policy eNewsletter archive that can searched by key word or phrase.  

(For more information, please email info@rer.org or call 202-639-8400 

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