Building  Owners  and  Managers  Association  International

Building Owners and Managers Association International

Terrorism Insurance

BOMA Position

Terrorism will remain a threat for the foreseeable future; the federal terrorism insurance program must remain in effect until the reinsurance industry is prepared to accurately underwrite and assume the whole risk.

Background

Following the September 11, 2001 terrorist attack, many owners of commercial properties were advised that their policies would not be renewed or that their new policies would exclude terror/war risks.  Without adequate insurance, it is difficult, if not impossible, to operate or acquire properties, refinance loans, and to sell commercial-backed securities. 

Since 9/11, BOMA and our coalition partners in the Coalition to Insure Against Terrorism (CIAT) have worked tirelessly to promote and implement a federal backstop program. We scored huge victories when Congress passed the Terrorism Risk Insurance Act of 2002 and again in late 2005 when Congress voted to extend TRIA for an additional two years. On December 26, 2007, just days before the Act was once again set to expire, President Bush signed H.R. 2761 into law to extend the program for an addition seven years through the end of 2014.

In addition to extending the federal program, the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA) expands the definition of "act of terrorism" to allow the certification of acts of "domestic terrorism"; clarifies the operation of the $100 billion annual program cap; and changes the manner in which the mandatory portion of post-event policyholder surcharges would be collected. It also requires the U.S. Government Accountability Office (GAO) to conduct a study of the availability and affordability of insurance coverage for nuclear, biological, chemical and radiological (NBCR) acts of terrorism.

​TRIA Reauthorization Passes Senate

On July 17, the Senate passed a 7 year extension of TRIA, the federal terrorism risk insurance program, by an overwhelming vote of 93-4. In additional to extending the program, the legislation (S. 2244) also adds two changes to further protect taxpayers. It gradually raises both the insurer co-payment from 15 to 20 percent and the mandatory recoupment threshold from $27.5 billion to $37.5 billion. In June, the Senate Banking Committee approved the legislation by a unanimous vote of 22 to 0.

On June 20, the House Financial Services Committee passed its TRIA bill (HR 4871) by a more contentious vote of 32-27 – along party lines. In addition to extending the program, the bill would also add many other changes to the bill, many of which BOMA feels would diminish the program and drive some insurers out of the market, making it more difficult for policyholders to continue to access terrorism risk coverage at reasonable rates and terms. It had been anticipated that the full House would vote on the legislation in late July, but now it appears that final action on this issue will be delayed, quite possibly until after the November elections.

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