The extension of the Terrorism Risk Insurance Act of 2002 (TRIA) — set to expire at the end of this year — is at the top of the re/insurance industry’s federal legislation priorities list, according to industry publication Business Insurance.

It states: “For many insurance trade groups, extending the federal terrorism insurance backstop again tops the list of federal legislative priorities this year, but with a sense of urgency greater than last year. That is because the programme established by the Terrorism Risk Insurance Act of 2002, passed in response to the September 11, 2001, terrorist attacks, is slated to expire at the end of 2014.”

The Terrorism Risk Insurance Act (TRIA) is a United States federal law creating a federal ‘backstop’ for insurance claims related to acts of terrorism, and was drafted with input from the Bermuda-based industry.

Risk & Insurance Management Society Ltd (RIMS), one of those trade groups, reported yesterday that their president Carolyn Snow testified before the Senate Committee on Banking, Housing and Urban Affairs during the ‘Reauthorising TRIA: The State of the Terrorism Risk Insurance Market, Part II’ hearing in Washington, DC.

RIMS is a global not-for-profit organisation representing more than 3,500 industrial, service, non-profit, charitable and government entities throughout the world, with 11,000 practising members.

According to the RIMS release, Ms Snow’s testimony described the current state of the terrorism risk insurance market; the role TRIA currently plays in the market; and the programme’s features that are designed to protect workers, communities and taxpayers. In her testimony, which RIMS said outlined the advantages of reauthorising TRIA prior to its expiration, she stated: “Since its inception, TRIA has allowed our member organisations to obtain such coverage at affordable rates. Prior to that, after 9/11 our members were unable to obtain such coverage, which jeopardised many contracts that contained covenants to carry terrorism insurance. For this reason it is vital that the programme be extended.

“We believe that the availability and affordability of adequate insurance coverage for acts of terrorism is not only an insurance issue, but an economic one … By providing a backstop and assuming some of the market terrorism risk as a reinsurer, the federal government has freed up capacity in the private market that would not otherwise exist. This capacity can then be made available to the consumer at affordable prices, which we have seen in the current marketplace.”

Business Insurance also quoted Ms Snow in their article on the topic, for whom she stated: “Our number one priority remains TRIA. We really want to see a long-term solution to TRIA. We were hopeful to get something done by the end of last year, so we’re hoping something will be done early in 2014.”

Business Insurance quoted other industry figures as well. Jimi Grande, senior vice-president in the Washington office of the Indianapolis-based National Association of Mutual Insurance Cos said: “TRIA extension would be number one on the list.” He added that NAMIC would prefer a long-term reauthorisation “with as few material changes as possible.”

And Nat Wienecke, senior vice president in the Property Casualty Insurers Association of America’s Washington office, said: “Clearly, our most important legislative priority next year is reauthorization of the terrorism response plan.” Reauthorising the TRIA is part of the terrorism “resilience strategy.”

And Leigh Ann Pusey, president and CEO of the American Insurance Association in Washington, said: “We view TRIA — particularly given its expiration date — as a priority for this year.”

And the RIMS release stated that without a TRIA-type programme, many entities will simply be self-insured due to lack of availability or affordability of coverage or both — leaving their companies and their workers exposed to an event that could bankrupt the company.

Business Insurance said that other legislative issues for the industry include streamlining producer licensing procedures, and proposed changes in reinsurance taxes and insurance regulation.