Grimm: TRIA Lapse Would Put Projects 'On Hold'

NEW YORK CITY-A failure to extend the Terrorism Risk Insurance Program would leave major development projects, here and in other gateway cities, in limbo, says Rep. Michael Grimm (R-NY). The Staten Island Congressman, who will serve as keynote speaker at RealShare New York on Oct. 8, has introduced the Terrorism Risk Insurance Act (TRIA) Reauthorization Act of 2013 with Rep. Carolyn Maloney, his Democratic colleague.

“If TRIA expires, not only will we expose our nation to great financial risk, we could see the availability of terrorism insurance diminish,” Grimm said Thursday as the House Committee on Financial Services held a hearing on the bill. “This would put large construction projects on hold and leave properties like skyscrapers, sports stadiums and key infrastructure uninsured. It would be irresponsible to allow TRIA to lapse, which is why Rep. Maloney and I have introduced the TRIA Reauthorization Act to extend this vital program for another five years,” through Dec. 31, 2019.

Following 9/11, “terrorism risk insurance disappeared from the marketplace,” says Martin DePoy, steering committee coordinator for the Coalition to Insure Against Terrorism, the members of which include NAIOP, NAREIT and the Real Estate Board of New York. “As a result, economic activity stalled, contributing to growing job losses and increasing hardship.”

The Terrorism Risk Insurance Act, enacted in 2002, “brought terrorism risk insurance back to the market, helping to re-start the engine of job creation and restore economic growth,” says DePoy. “The terrorism risk insurance mechanism established by TRIA has performed this function effectively and efficiently for more than a decade, and numerous studies have shown that terrorism risk coverage would once again disappear from the market without it.  CIAT fully endorses the efforts of Reps. Grimm and Maloney to extend this legislation and continue its important contribution to economic vitality and national security.”

Under the program created by the original passage of TRIA, the federal government would share some of the losses with private insurance in the event of another attack. To be recognized as eligible for TRIP, an individual act of terrorism must be certified jointly by the Secretary of the Treasury, Secretary of State and US Attorney General, and losses must exceed $5 million.

The federal government shares in an insurer's losses only if the insurance industry's aggregate insured losses from certified acts of terrorism exceed $100 million. The amount of the government share varies depending on the size of uninsured losses.

Each insurer must meet a deductible, equal to 20% of its annual direct earned premiums for TRIA-covered lines of insurance, before receiving federal coverage. Once the $100 million aggregate loss threshold and 20% deductible are passed, the federal government is to cover 85% of each insurer's losses above its deductible up until the amount of total losses $100 billion.

In August, Grimm voted in favor of the Regulations from the Executive in Need of Scrutiny Act, which requires an up-or-down vote in Congress on any major new regulation with an economic cost of $100 million or more “More government does not create jobs, but by rolling back these onerous regulations, we can create a friendly environment for job creation,” he said when the measure passed in the House of Representatives.  “Our local economy deserves an opportunity to grow and one way to do that is to rein in these job-killing regulations that have kept American businesses from remaining competitive and creating new jobs.”