The US Treasury Department believes the Terrorism Risk Insurance Act (TRIA) should not be extended...
The US Treasury Department believes the Terrorism Risk Insurance Act (TRIA) should not be extended in its present form as it is acting as an hindrance to further innovation within the industry.
In a letter accompanying Treasury's report on the terrorism insurance market, Treasury secretary John Snow said: "Continuation of the program in its current form is likely to hinder the further development of the insurance market by crowding out innovation and capacity building.
"Consistent with its original purpose as a temporary program scheduled to end on 31 December 2005, and the need to encourage further development of the private market, the administration opposes extension of TRIA in its current form."
Snow said the Bush administration would accept a temporary extension of the program only if certain conditions were met, including increasing to $500m (£281m) the size of the terrorist event needed to trigger TRIA coverage, requiring individual insurers to pay higher deductibles, and eliminating a number of lines of coverage—including commercial automobile and general liability—from TRIA's protection.
Risk managers, insurers and brokers have supported an extension of TRIA, holding that the private market would lack the capacity to meet the demand of terrorism insurance without the TRIA backstop.
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