The House of Representatives decided Tuesday to extend the Terrorism Risk Insurance Act, or TRIA, for seven more years by a vote of 360 to 53. It now goes to the president, who is expected to sign the extension into law.
The act serves as a federal financial backstop in the event of a catastrophic terrorist attack. The original act was passed in 2002 after the attacks of September 11, 2001, when many insurance companies began to exclude terrorism events from their policies. TRIA gave insurers the added security of having an “insurer of last resort.”
TRIA was extended in 2005 for an additional two years and is set to expire at the end of this year. Companies with large real estate holdings have been especially supportive of a TRIA extension, as they stand to lose the most if their property is attacked. Speaking at a House Committee hearing last April, Joseph Ditchman, senior vice president of Colliers Ostendorf-Morris, a commercial real estate company, called for the act to be made permanent.
“TRIA has helped make terrorism insurance available and affordable to businesses, particularly those in our major urban areas,” said Rep. Mike Capuano, a Democrat from New York. “Without TRIA, many major development projects across the country could have been halted, putting many jobs and economic development opportunities at risk.”
The extension of the act was controversial, as some Republicans and the Bush administration hoped to eliminate the measure. Critics have argued that the federal backstop represents an unfair subsidy for insurers and prevents the market for terrorism insurance from maturing on its own. Earlier this year, Republicans argued that TRIA should remain a short-term solution and that government assistance should be rolled back over time. However, the president is expected to back this extension.
Proponents of TRIA were disappointed that a more comprehensive, and longer, version of the act failed to gain traction. Some have even argued that the extension should be indefinite. In September, the House approved a plan extending the program for 15 years with a threshold of $50 million that would “trigger” federal aid. It also had a broader definition of what constitutes an attack and included group life insurance. The Senate’s revised version, which the House passed on Tuesday, maintains a $100 million threshold and continues the existing model.
“I am disappointed that the final TRIA bill omitted key elements of our stronger House legislation,” said Rep. Carolyn Maloney, also a Democrat from New York. “But this is a solid compromise measure that will help stabilize the market and ensure the ongoing availability of affordable terrorism risk insurance.”