Magazine article Mortgage Banking

Executives Expect Congress to Renew Terrorism Insurance

Magazine article Mortgage Banking

Executives Expect Congress to Renew Terrorism Insurance

Article excerpt

Leaders of the property/casualty insurance industry expect Congress to extend the Terrorism Risk and Insurance Act (TRIA) in 2007, according to a survey conducted by the New York-based Insurance Information Institute (I.I.I.).

Eighty-nine percent of insurance executives surveyed during I.I.I.'s 11th annual Property/Casualty Insurance Joint Industry Forum in January said they are confident that the new Congress will move quickly to extend the law for a significant period, or to provide a permanent backstop.

As Mortgage Banking has reported, the Terrorism Risk Insurance Extension Act of 2005 (TRIEA), signed by President Bush at the end of 2005, authorizes full, mandatory taxpayer reimbursement for federal assistance provided under the program, while significantly raising the deductibles and co-shares over current program levels.

Just as with the original TRIA, which passed in 2002 and expired at the end of 2005, TRIEA is designed to keep a temporary federal terrorism-insurance mechanism in place through the end of 2007 until a permanent solution is crafted (see Mortgage Banking, January 2006, p. 97; and February 2006, p. 134).

In the more than five years since the Sept. 11, 2001, terrorist attacks, the frequency and severity of future attacks is still fundamentally unknowable," noted James Valverde, I.I.I.'s vice president of economics and risk management

"The need for a public/private partnership continues," said Valverde. "The benefits are many, including promoting stability in the financial markets and to focus the federal role on those risks the private sector is not able to assume."

However, when it comes to whether Congress will adopt a national catastrophic insurance plan in 2007, 88 percent of respondents do not think it will occur. In addition, 63 percent of insurance leaders think the push for an optional federal charter will not gain momentum in the new Congress. …

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