Insurance trade groups and regulators are urging Congress to approve a long-term extension of the Terrorism Risk Insurance Act before it expires in December 2027, warning that failure to act could destabilize the insurance market and broader economy.
The National Association of Insurance Commissioners (NAIC) and multiple trade organizations testified before the US House Subcommittee on Housing and Insurance this week, advocating for a seven- to 10-year renewal of the federal terrorism insurance backstop.
Connecticut insurance commissioner Andrew Mais, a past president of NAIC, told lawmakers that government involvement remains essential for private insurers to offer terrorism coverage. Without an extension, carriers would likely withdraw from the market entirely.
“TRIA stabilizes not only the insurance sector, but the broader economy,” Mais said during his testimony. “Businesses and consumers that live, work, and shop in communities in every state benefit from a stable insurance sector, which provides commercial terrorism insurance only because TRIA exists as a backstop.”
The current authorization runs through 2027 after Congress approved a seven-year extension in 2019, BestWire reported. TRIA was originally created in 2002 following the September 11 attacks when lenders began requiring terrorism coverage that insurers could not provide without federal support.
Under the program, insurers must keep terrorism coverage affordable in exchange for the ability to spread a percentage of their terrorism-related losses over several years. The federal government provides up-front funding for the percentage of losses after companies pay a deductible, though carriers must pay interest on those funds.
The American Property Casualty Insurance Association described TRIA as the cornerstone of the country’s economic resilience that operates at minimal cost to taxpayers. The group praised federal lawmakers for beginning work on an extension well ahead of the 2027 deadline.
Elizabeth Heck, former chairperson of the National Association of Mutual Insurance Companies (NAMIC) and CEO of Greater New York Insurance Cos., emphasized the program’s role in maintaining market competition.
“TRIA allows insurers a degree of certainty, which has enabled companies of all sizes to offer coverage, making for a competitive market and affordable premiums,” Heck said in a statement.
Heck noted that while the program has not been tested since implementation, it has supported significant construction and economic development across the country. NAMIC also supports a seven- to 10-year extension of the current program structure.
What steps can Congress take to prevent uncertainty in terrorism coverage? Share your insights in the comments below.
