Senate weighs in on TRIA

Real Estate Weekly, Oct 24, 2007 by Jason Turcotte

The U.S. House of Representatives showed overwhelming support for expansion of the Terrorism Risk Insurance Act (TRIA), passing a bill to extend the legislation 15 more years. Now it lies in the hands of the Senate and they're looking for a less-extensive solution.

"There's no permanent TRIA law and the newest TRIA law is set to sunset in December," said Sharon Emek, managing director at CBS Coverage Group.

Emek, who has testified before the state and city senate in support of extending TRIA, spoke at the BOMA/NY Annual Conference and Trade Show about the challenges that lie ahead for the bill.

According to Emek, the bill faces many more critics in the Senate, particularly among GOP members.

Some legislators have suggested amending the bill to omit its inclusion of nuclear, biological, chemical and radiological attacks and reduce the terms to a five-year extension, rather than the 15 years approved by the House. And President Bush has promised to veto any bill resembling the one passed by the House last month. Opponents of the measure fear a spike in property taxes and they prefer to let things play out in the free market.

But Emek says the House bill has the backing of the insurance industry and that a long-term TRIA extension should include protection from domestic terrorist attacks, along with nuclear, biological, chemical and radiological attacks. But the Senate somewhat disagrees.

Last week the Senate Committee on Banking, Housing and Urban Affairs passed its Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), which endorses a seven-year extension for TRIA. While it does expand coverage for both domestic and foreign terrorist attacks, it does not include coverage for nuclear, chemical, biological and radiological attacks.

But the compromise comes to the liking of the Coalition to Insure Against Terrorism (CIAT), which represents a diverse group of businesses including those in the real estate sector.

"We're pleased that the Senate is looking at a long-term solution to the issue of terrorism risk insurance," said Martin DePoy, CIAT steering committee coordinator.

"TRIPRA's seven-year term would give businesses the ability to plan, finance and execute large-scale projects, which is essential to support economic growth."

DePoy says TRIA has helped bring stability to the post-9/11 economy and can be credited with safeguarding the job market.

TRIA--created in response to the World Trade Center attacks--was originally adopted as a three-year program, before it was extended through 2007.

The legislation compensates the insurance industry for losses resulting from terrorism, requiring that property and casualty insurers make such coverage available. I

t also provides a government back-stop covering 90% of insured looses of up to $100 billion (after deductibles) each year.

The Banking Committee's bill, sponsored by Senator Chris Dodd (D-CT) and Richard Shelby (R-AL), now advances to the full Senate for a vote.