Today, Democratic Leader Harry Reid signed on as a co-sponsor of S. 467, the Terrorism Risk Insurance Extension Act (TRIA) of 2005. TRIA provides an important government backstop for the terrorism insurance market that disappeared after the attacks of September 11th. This legislation has been effective in assisting business access to terrorism risk insurance and providing stability to our economy in these unfortunately unstable times. Reid signed on as co-sponsor as Senator Charles Schumer (D-NY) and Senator Jack Reed (D-RI) went to the floor to express their support for this crucial legislation.
Senator Reid’s Floor Statement on Co-Sponsoring S. 467
The Terrorism Risk Insurance Extension Act of 2005
Mr. President, I ask unanimous consent to include in the record a written statement that I submitted at a symposium sponsored by the U.S. Chamber of Commerce on extending the Terrorism Risk Insurance Act, or TRIA. Finally, I ask unanimous consent to include in the record a letter signed by seventy-four CEOs of the largest integrated financial services companies in the country which provide banking, insurance and investment products and a second letter from the Coalition to Insure Against Terrorism (CIAT), which represents over seventy-five companies and major associations, a virtual cross section of the U.S. economy, both of which express strong support for extending the terrorism insurance program.
Mr. President, in 2002 I co-sponsored, and Congress passed, the Terrorism Risk Insurance Act, commonly referred to as TRIA. This important legislation provided a government backstop for the terrorism insurance market that disappeared after the attacks of September 11. TRIA is working. Today, because of TRIA, terrorism risk insurance is available and businesses have meaningful access to coverage. The primary purpose behind TRIA, and the reason it needs to be extended, is to make sure that the American economy and markets function in the face of a terrorist threat. There needs to be a mechanism in place to allow the economy to rebound more quickly and to protect American jobs in the unfortunate event of another terrorist attack here in the United States. The threat of an attack has not gone away and will not go away when TRIA expires at the end of 2005.
While some in Washington continue to hope that a private market will develop in the absence of TRIA, let me quote from two reports put out recently by those who are in the business of watching markets. The first is a Special Report by the rating agency Moody’s Investors Service dated April 28 which expressed concern about the potential effects of the pending expiration of the Terrorism Risk Insurance Act (TRIA).
Moody’s noted, that insurance brokers report that up to 75% of policies written since January 1st have adopted a conditional endorsement that automatically voids terrorism coverage if TRIA is not renewed, and that the number of conditional endorsements is expected to increase as the year progresses. The report stated, “These conditional endorsements appear to be an indication that unless TRIA is renewed, premium spikes, or a sharp reduction in availability of coverage, may result. The report warns, “Moody’s is unaware of any viable private market initiative that would take the place of TRIA.”
Secondly, Marsh Inc., in a report released on April 25, entitled Marketwatch: Terrorism Insurance 2005, concludes: “If TRIA is not extended, the stand-alone insurance market is unlikely to have sufficient capacity to satisfy all of the expected demand at commercially viable prices.”
The Bush Administration official who spoke at the recent U.S. Chamber symposium on TRIA simply gave those in attendance a history lesson on the issue, but refused to give any indication whether the Administration would support or oppose an extension of TRIA. Policy holders from major sectors of the economy–real estate, financial services, energy, entertainment, hotel, and hospital industries–feel like they are being left to twist in the wind wondering whether the Administration and the Congress are going to take the necessary action so that they can properly and responsibly protect their properties. There is absolutely no sense of urgency by this White House and I think they would like to see this issue quietly go away.
The financial dislocation caused by another possible terrorist attack is too important to ignore and we should not continue to delay action on an issue that is so important to our economy and the American workforce. We should act on extending TRIA and act promptly.