A Financial Services Subcommittee hearing on Tuesday will examine the capacity of the insurance industry to offer terrorism risk insurance without a Federal backstop.
The Terrorism Risk Insurance Act (TRIA), a temporary risk sharing program created in 2002 to ensure consumers have access to terrorism insurance, is set to expire at the end of 2014. Members of the Insurance, Housing and Community Opportunity Subcommittee will evaluate TRIA's impact on various sectors of the economy, assess the private sector's capacity to offer terrorism insurance coverage without a federal backstop, and explore options for encouraging greater private-sector participation in the terrorism insurance marketplace.
"Our hearing will give Congress an opportunity to examine the impact of TRIA over the last decade, and look closely at whether the private sector is ready to step in and provide reliable reinsurance and insurance coverage for terrorism-related losses without a federal backstop," said Insurance, Housing, and Community Opportunity Subcommittee Chairman Judy Biggert. "TRIA was always meant to fill a temporary vacuum in the private market, and after ten years, this hearing will provide a fresh assessment of the program and the capacity of the insurance sector to provide this important protection."
Following the September 11, 2001 terrorist attacks on the United States, insurers and reinsurers were unable to price for such risks and withdrew from the market. The shift created a void in the insurance marketplace where terrorism coverage was unavailable for businesses and employers, some of whom were obligated to have such insurance.
In 2002, Congress passed the Terrorism Risk Insurance Act to establish a three-year risk-spreading program to back up the insurance marketplace for consumers in the event of a terrorist attack. Congress extended TRIA in 2005 and again in 2007.
The Subcommittee hearing will take place on Tuesday, September 11 at 10 a.m. in room 2128 Rayburn.