End of "Terrorism Risk Insurance Act" a Danger, Expert Says

The upcoming end of a government program designed to mitigate risk for the insurance industry could put us all at risk, says one insurance expert.

In a Washington Times article, Ramani Ayer, chairman and CEO of the Hartford Financial Services Group, says the Terrorism Risk Insurance Act, also known as TRIA, will end in six months. The program, passed by Congress in 2002, was designed to have the government take on the role as terrorism insurer of last resort.

Ayer warns that the government should take action before the TRIA act runs out, citing the September 11 terrorist attacks on the World Trade Center as an example of how the insurance industry works. “The building, the businesses in it, their employees and the people and economy in nearby neighborhoods all took a direct, terrible hit,” Ayer says. “Insurance policies, backed by reinsurance treaties - the so-called ‘private markets’ - allowed damage claims to be paid in full.”

Ayer says the Treasury Department has already released a report on TRIA’s effectiveness, and stresses that “other voices need to be heard as well. From our vantage point on the front lines of terrorism insurance, TRIA has done its job.”

Under TRIA, Ayer says, the insurance industry can absorb claims for any terrorist attack up to $30 billion – which means an event roughly the size of September 11. But in an attack of greater proportions, TRIA would allow the industry to still pay a substantial share, with the government acting as a reinsurer. “Insuring against a wide-area attack that causes, according to some models, ten or more times the economic damage of September 11, is a risk that only the United States Government has the resources to assume,” Ayer says.

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