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Michael Capuano |
Only two days after the White House announced that the private insurance markets should be the only provider of anti-terrorism insurance, the US House of Representatives has passed a bill extending the existing government compensation scheme for another 25 years!
On September 19th, the House of Representatives, the lower chamber of the US Congress, passed the Terrorism Risk Insurance Revision and Extension Act which extends the Terrorism Risk Insurance Act (TRIA) for another 15 years to 2022. TRIA was passed following 9/11 to protect against terrorism-related losses - and renewed in 2005 till the end of 2007 - to provide a government backstop to the insurance industry by providing compensation for a portion of insured losses resulting from acts recognised by the government as acts of terrorism. The new extension bill also expands the TRIA coverage to include insured losses from domestic terrorism (currently only terrorism from a foreign source is covered), to cover nuclear, biological, chemical, and radiological acts of terrorism, and reduces the trigger point for coverage from $100 million to $50 million.
The House of Representatives, together with business and insurance supporters, argue that there is no good commercial case for a sustainable private insurance market to offer the protection TRIA has provided for the past five years, therefore it should be further extended.
In a statement released on Monday, 17th September, the Bush government said they would veto any extension of the TRIA as it believes the act should be phased out to allow a private market for terrorism insurance to develop. "TRIA was intended to provide a temporary mechanism to allow the marketplace to adapt in the short run after economic dislocations resulting from September 11," the statement said.
Extension bill sponsor Congressman Mike Capuano said "TRIA has helped make terrorism insurance available and affordable to businesses, particularly those in our major urban areas. Improving and extending this program will help spur America's continued economic development by providing certainty that terrorism insurance will be available for years to come.”
The bill has still to be passed by the upper house, the Senate, and it remains to be seen if the White House will implement a veto. | 
