Back on December 19th we wrote about the impact that an expiration of TRIA on December 31 could have on the availability of certain types of insurance coverage!
‘If TRIA expires, commercial insurers will no longer be required to offer terrorism coverage beginning January 1. Without a federal backstop, insurers may seek to limit underwriting for high concentrations of risks in major cities—causing terrorism insurance coverage to become unavailable or unaffordable. Insurers that do continue to offer commercial terrorism insurance would likely be required to maintain higher capital standards in order to avoid negative rating implications. Where coverage for terrorism-related events is still available, prices for this coverage will increase.
In the absence of TRIA, the workers’ compensation insurance market would be particularly vulnerable to terror attack losses. State workers compensation statutes offer insurers less flexibility to control terrorism risk through modifications such as policy limits or coverage exclusions. With or without TRIA, it is mandatory for U.S. employers to provide workers’ compensation coverage. If coverage is not available, employers may be forced to purchase insurance in the residual markets or self-insure. This could result in large amounts of risk being transferred to the residual market in a few states.
Allowing TRIA to expire would have widespread implications, not only for the insurance industry, but also for the broader economy. Construction and real estate business sectors may be unable to obtain financing without adequate terrorism coverage in place. If insurers limit underwriting following an expiration of TRIA, businesses with high concentrations of employees could have difficulty obtaining coverage for workers’ compensation, including higher education institutions, hotels, airports, hospitals, and financial services, among many others.‘ (Source)
Low and behold, although not particularly surprising to many, TRIA did expire on December 31, 2014 due to a lack of action by lawmakers in Washington.
TRIA Being Fast-Tracked In The House And Then On To The Senate!
The good news, from The Hill, ‘Republican leaders have put reauthorizing the Terrorism Risk Insurance Act (TRIA) on fast-track procedure, which means the legislation will require a two-thirds majority to pass.
That should be an easy hurdle to clear, as the House passed a six-year extensions of the program on a 417-7 vote in December, with all seven of the “no” votes coming from Republicans.
The measure died in the Senate because liberals opposed riders attached to the bill that they said would weaken Wall Street regulations.
A broad coalition of business groups has pressured lawmakers to reauthorize TRIA, which allows for the federal government to act as a backstop following a catastrophic terrorist attack.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) worked with Republican leadership to ensure that a vote would happen this week, according to sources familiar with the issue.
An industry source said that there would be “no substantive changes to the bill that passed last year.”‘
We will keep you posted as the legislation moves forward.
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Michael Haltman, President of Hallmark Abstract Service, New York.
HAS is a provider of title insurance in New York State for residential and commercial real estate transactions specializing in the areas of New York City, Long Island and Westchester.
For anyone either buying a property or refinancing, remember that although your attorney will likely recommend a title insurance provider, you always have the right to choose your own title company (click here to learn more)!
If you have any questions you can reach Michael by email at mhaltman@hallmarkabstractllc.com.
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