by Brianna Crandall — January 14, 2015—On the same day as the terrorist attacks in Paris last week, the U.S. Congress voted with overwhelming bipartisan support to reauthorize the Terrorism Risk Insurance Act (TRIA), a federal program created following the September 11, 2001, terrorist attacks that allows the government to repay business costs after a catastrophic attack that exceeds $200 million in damage.
U.S. lawmakers had failed to reauthorize the program during the last Congress, and it expired on December 31, leading to uncertainty in the business community, according to a blog from The Hill. The delay was due to issues with a provision that would give more regulatory freedom to nonfinancial institutions, and a provision that would create a national, nonprofit clearinghouse that would allow insurance agents to register and establish a national standard.
Lawmakers pointed out that businesses were already facing consequences seven days into the expiration of TRIA. “Already, companies are having trouble getting terrorism insurance, and many companies that had terrorism insurance have now lost it because there were clauses written into their policies that said if TRIA is not there, they do not have the insurance coverage,” said Rep. Carolyn Maloney (D-N.Y.).
Both the residential and commercial real estate trade association National Association of Realtors (NAR) and NAIOP, the Commercial Real Estate Development Association, issued statements commending Congress for the renewal of the TRIA program, following up on previous statements covered by FMLink in the January 7 posting “NAR, NAIOP applaud Congressional real estate tax extensions, criticize failure to renew terrorism risk insurance program.”
National Association of Realtors (NAR)
On January 7, NAR President Chris Polychron issued the following statement: “Realtors applaud the U.S. House of Representatives and U.S. Senate for prioritizing the reauthorization of the federal terrorism risk insurance program and quickly passing the Terrorism Risk Insurance Act, which authorizes the program for six years. When TRIA lapsed at the end of 2014, Realtors urged swift congressional action to renew the program and return certainty to the commercial real estate market.
“TRIA provides a crucial framework for economic recovery in the wake of a catastrophic terrorist attack and allows the U.S. to maintain a stable terrorism insurance market so employers can invest in properties, create jobs and insure against losses due to a terrorist attack. Without TRIA, many property owners with existing commercial mortgage balances that require terrorism insurance would be in technical default of their mortgage terms.
“The bill sent to President Barack Obama’s desk today provides commercial property owners with sustained and affordable access to terrorism insurance, which is required by commercial mortgage-backed securities. NAR urges Obama to sign the TRIA reauthorization without delay.”
NAIOP, the Commercial Real Estate Development Association
On January 08, NAIOP President and CEO Thomas J. Bisacquino issued the following statement: “We commend and congratulate the Members of Congress who gave their overwhelming support to renew the Terrorism Risk Insurance Act (TRIA). This bipartisan legislation will ensure the commercial real estate development industry can continue to provide good jobs and economic growth for America.
“This is sound policy because it enables insurers and private sector capital to provide coverage for losses that otherwise would fall upon the taxpayer. This vital security blanket could help save billions of dollars that would otherwise be spent in the aftermath of a terrorist attack.
“Renewing TRIA for six years represents a major victory for the commercial real estate industry and the millions of jobs and economic growth it supports. Today’s vote gives developers the peace of mind to invest in an industry that contributed $376 billion to GDP last year, supported 2.8 million jobs, and produced $120 billion in personal earnings.”
