Treasury Dept. Grants Reprieve for Terrorism Insurance Provision

WASHINGTON, DC-The "make available" provision of the Terrorism Insurance Risk Act, scheduled to expire this summer on Sept. 1, has gotten a reprieve. The US Department of the Treasury revealed on Friday its decision to extend this portion of TRIA that mandates insurance companies make terrorism insurance available on the same terms as property and casualty insurance. Now the provision will remain in place through Dec. 31, 2005, the same date that TRIA, as a whole, is scheduled to expire.

"The terrorism risk insurance program has been an important confidence builder as this country recovered from the attacks of Sept. 11 and the recession," Treasury Secretary John Snow says in a statement on the extension. "By extending the make available provision, we ensure that our overall evaluation of the program's success is based on information and assumptions that are consistent and that there's no changing of the rules in the middle of the game."

Representatives of industries ranging from banking to building have been campaigning for the extension of the "make available" provision for months, and the Coalition to Insure Against Terrorism has been courting the Treasury on behalf of many of the sectors that are affected by terrorism insurance. As a result, Friday's coup had a far-reaching and resounding effect.

"We believe that for a significant number of assets all across the country, owners would find it very difficult, if not impossible, to obtain terrorism risk insurance, and that would have made it very difficult to refinance, sell, or acquire assets; and consequently, the economy would have suffered," Jeff D. DeBoer, president of Real Estate Roundtable tells GlobeSt.com. RER is also a member of CIAT. Had the "make available" provision not been renewed, there would have been a gap in coverage for the 2004-2005 insurance renewal season.

The next step for terrorism insurance is campaigning for the renewal of TRIA itself before it expires at the end of next year. Speaking to GlobeSt.com, CIAT spokesperson Martin L. DePoy says, "The extension of TRIA is important to the security of our country." DePoy is also vice president for government relations for the National Association of Real Estate Investment Trusts. "We have to make sure the country is prepared form an economic standpoint in there are other terrorist attacks."

The extension of the "make available" provision, however, does not guarantee the extension of TRIA. "It's still somewhat of a long shot," RER's DeBoer says. "However, everyday, the odds improve as members of Congress continue to be educated on why it's important for the marketplace to extend the program before it actually comes up for renewal." And DeBoer's hopes are buoyed by the Treasury's recent action. "The renewal of 'make available' is evidence that policymakers understand that the insurance marketplace has not stabilized for terrorism insurance, because without the federal program, private markets are not capable on their own of providing this kind of insurance," he says. "Owners and financiers of real estate across the country should work with members of Congress to make sure they understand the importance of TRIA."