Yesterday, Tuesday, June 18th, the Senate Banking, Housing and Urban Affairs Committee held a hearing, for which PIA National submitted testimony, on the reauthorization of the Terrorism Risk Insurance Program (TRIP). This hearing kicked off the reauthorization discussion for the TRIP, which is currently set to expire on December 31, 2020. PIA National has supported the TRIP since its inception and will continue to argue for a long-term reauthorization.
Following the terrorist attacks of Sept. 11, 2001, the property/casualty sector of the insurance industry determined that it could not sustain an additional terrorist attack without serious financial consequences for the nation’s economy. As a result, in 2002, the Terrorism Risk Insurance Act (TRIA) was written and signed into law, creating the Terrorism Risk Insurance Program (TRIP). The program has since been reauthorized in 2005, 2007, and, most recently, in 2015.
During the last reauthorization process, several changes were made to the program. The previous $100 million loss trigger was gradually raised to $200 million over a period of five years. The copay has been increasing by one percentage point per year, starting at 15 percent, from 2016 and 2020. The insurance industry’s total obligation to repay the federal government for funds paid for terrorist attack losses (or “recoupment rate”) was increased from $27.5 billion to $37.5 billion through deductibles and copays. Pursuant to the 2015 reauthorization, the government and policyholders cannot be made to pay more than $100 billion in losses for a terrorist attack.
The TRIP fills a void in the market and provides a level of certainty during an uncertain time. It is critical that Congress work to extend the TRIP before it expires on December 31, 2020. PIA National supports a long-term, straightforward extension of the TRIP well before its expiration to provide stability to and reduce uncertainty among policyholders and markets.