House Financial Services Committee Holds First in a Series of Hearings on TRIA Program
Congresswoman Maxine Waters, Ranking Member of the House Financial Services Committee, delivered the following opening statement at today's full Committee hearing on the Terrorism Risk Insurance Act, known as TRIA.
TRIA was enacted in the aftermath of the terrorist attacks of September 11, 2001, which caused estimated insured losses of $40 billion in current dollars – the largest from a non-natural disaster on record. As a result, many insurers and reinsurers began to exclude terrorism coverage from commercial insurance policies. If coverage was offered at all, it was at a cost that was prohibitively high.
To address the problem, in 2002 Congress enacted TRIA. The program makes terrorism insurance both available and affordable – by requiring insurance companies to offer coverage to commercial entities in exchange for a federal backstop that is used to protect against only those terrorism-related losses that exceed $100 million dollars. The program will sunset in 2014.
An overwhelming number of stakeholders from a wide range of industries support TRIA’s renewal, including the National Association of Realtors, U.S. Chamber of Commerce, International Association of Amusement Parks & Attractions, Jewish Federations of North America, National Conference of Insurance Legislators, U.S. Conference of Mayors, American Hotel and Lodging Association, National Association of Mutual Insurance Companies, the International Council of Shopping Centers and every major national sports league and organization, including the MLB, NFL, NBA, NHL, NCAA, NASCAR and the U.S. Olympic Committee.
As prepared for delivery:
Thank you, Mr. Chairman.
I’d like to thank Chairman Hensarling for holding this hearing, which is the first in a series focused on the reauthorization of the Terrorism Risk Insurance Act, known as TRIA (TREE-A). For more than a decade, TRIA has been nothing short of a qualified success, supporting critical economic growth by ensuring access to terrorism coverage for our largest venues, businesses and employers.
The terrorist attacks of September 11, 2001 forever changed the way we live and do business. In addition to the tragic loss of life and disruptions to our financial system, insurance losses totaled an estimated $40 billion in today’s dollars.
The enormity of the losses made it financially impossible for many insurers and reinsurers to offer terrorism coverage. Consequently, most fled the market and state insurance regulators allowed providers to exempt terrorism coverage from their policies. Those that did offer coverage did so at a cost that was prohibitively high.
As a result, in 2002 Congress stepped in, enacting TRIA. The program makes terrorism insurance both available and affordable – by requiring insurance companies to offer coverage to commercial entities in exchange for a federal backstop – which is used to protect against only those terrorism-related losses that exceed $100 million dollars.
By requiring private insurers to offer terrorism coverage, TRIA actually reduces taxpayer exposure because it keeps most of the terrorism risk with the private sector. Without affordable terrorism insurance, many buildings, schools, and venues would remain uninsured against terrorist attacks, meaning that the government likely would pick up 100 percent of the tab for catastrophic losses.
The success of the TRIA program has been remarkable, and it has fostered continued economic and commercial real estate development across the U.S. TRIA is strongly supported by a broad coalition of businesses and organizations representing a wide array of industries, including construction, manufacturing, retail, transportation, real estate, sporting and entertainment. Entities from the National Football League to the U.S. Chamber of Commerce to the National Association of Realtors have lauded the program’s importance.
Support for TRIA is so strong and so widespread that it has been reauthorized twice by the House – both times without controversy and with overwhelming bipartisan support.
But as we approach its expiration in 2014, opposition to the quick, clean and long-term renewal of this popular and noncontroversial program remains a mystery to me.
While opponents argue that the program inhibits private sector participation, the private sector itself maintains that without TRIA in place, insurers would fall into the same practices that followed the attacks of September 11. This would mean the exclusion of terrorism coverage that would cushion the economic shock of a large terrorist attack or series of attacks – something that remains essential for economic growth and job security.
Mr. Chairman, I support reauthorizing TRIA, and I am encouraged by the several proposals on the table to do so. In addition to the bill by Representative Capuano, which I have cosponsored, we have seen bipartisan legislation from Representatives Maloney and Grimm, as well as a bill from Representative Thompson. While each bill differs slightly in form, of the utmost importance is that TRIA is reauthorized quickly, cleanly and for the long-term.
I thank you again for holding this hearing and I look forward to the testimony of my colleagues and the other witnesses. I yield back the remainder of my time.
- National Association of Realtors (NAR)
- U.S. Chamber of Commerce
- American Gaming Association (AGA)
- International Association of Amusement Parks & Attractions (IAAPA)
- Jewish Federations of North America (JFNA)
- National Association of Insurance Commissioners (NAIC)
- Joint letter from national sports leagues and organizations
- National Conference of Insurance Legislators (NCOIL) TRIA resolution
- National Conference of State Legislatures (NCSL) TRIA resolution
- New Mexico Mutual
- American Public Transportation Assoc (APTA)
- U.S. Conference of Mayors (USCM) TRIA resolution
- Workers Compensation Fund (WCF)
- National Association of Mutual Insurance Companies (NAMIC)
- National Association of Real Estate Investment Trusts (NAREIT)
- NAIOP, Commercial Real Estate Development Association
- International Council of Shopping Centers, Inc. (ICSC)
- Building Owners & Managers Association International (BOMA)
- Real Estate Roundtable
- CRE Finance Council
- Real Estate Board of New York (REBNY)
- American Hotel & Lodging Association (AHLA)
- Accident Fund Holdings, Inc
- Joint insurance industry letter – NAMIC, FSR, Independent Insurance Agent, PCI, AIA, The Council
- National Multi Housing Council (NMHC) and National Apartment Association (NAA)
- Bloomberg Government study, “Extending Terrorism Insurance,” July 17, 2013
- Insurance Journal article, “Private market will dry up if federal terrorism insurance is not renewed: AON,” September 18, 2013