Renew TRIA Now

Mr. President, in 2002 I co-sponsored, and Congress passed, the Terrorism Risk Insurance Act, commonly referred to as TRIA. This important legislation provided a government backstop for the terrorism insurance market that disappeared after the attacks of September 11.

TRIA is working. Today, because of TRIA, terrorism risk insurance is available and businesses have meaningful access to coverage.

Purpose of TRIA
The primary purpose behind TRIA, and the reason it needs to be extended, is to make sure that the American economy and markets function in the face of a terrorist threat.

There needs to be a mechanism in place to allow the economy to rebound more quickly and to protect American jobs in the unfortunate event of another terrorist attack here in the United States.

The threat of an attack has not gone away and will not go away when TRIA expires at the end of 2005.

Private market options
While some in Washington continue to hope that a private market will develop in the absence of TRIA, let me quote from two reports put out recently by those who are in the business of watching markets.

The first is a Special Report by the rating agency Moody’s Investors Service dated April 28 which expressed concern about the potential effects of the pending expiration of the Terrorism Risk Insurance Act.

Moody’s noted that insurance brokers report that up to 75 percent of policies written since January 1st have adopted a conditional endorsement that automatically voids terrorism coverage if TRIA is not renewed, and that the number of conditional endorsements is expected to increase as the year progresses.

The report stated:

“These conditional endorsements appear to be an indication that unless TRIA is renewed, premium spikes, or a sharp reduction in availability of coverage, may result.”

The report warns that Moody’s is unaware of any viable private market initiative that would take the place of TRIA.

Stand-alone market
Secondly, Marsh Inc., in a report released on April 25, entitled Marketwatch: Terrorism Insurance 2005, concludes:

“If TRIA is not extended, the stand-alone insurance market is unlikely to have sufficient capacity to satisfy all of the expected demand at commercially viable prices.”

History lesson
The Bush Administration official who spoke at the recent U.S. Chamber symposium on TRIA simply gave those in attendance a history lesson on the issue, but refused to give any indication whether the Administration would support or oppose an extension of TRIA.

Policy holders from major sectors of the economy — real estate, financial services, energy, entertainment, hotel, and hospital industries — feel like they are being left to twist in the wind wondering whether the Administration and the Congress are going to take the necessary action so that they can properly and responsibly protect their properties.

No Bush urgency
There is absolutely no sense of urgency by this White House and I think they would like to see this issue quietly go away.

The financial dislocation caused by another possible terrorist attack is too important to ignore and we should not continue to delay action on an issue that is so important to our economy and the American workforce.

We should act on extending TRIA and act promptly.

Senate Democratic Leader Harry Reid (D-NV) is a co-sponsor of S. 467, the Terrorism Risk Insurance Extension Act of 2005. This column is taken from his remarks earlier this month on the Senate floor urging renewal of TRIA.