As industry pushes for TRIA renewal, others say ‘not so fast’
Among those urging a thorough debate is the R Street Institute, a Washington-based conservative think tank.
R Street Senior Fellow R.J. Lehmann says a comprehensive debate should take place over whether the program should be renewed, phased out or reformed in significant ways to better protect taxpayers.
Lehmann says that, over the past 10 years, pricing for terrorism insurance has fallen significantly; take-up of coverage, which grew rapidly in the early years of TRIA, has remained flat since 2005 at about 60 percent; and private reinsurance capacity has grown from non-existent in late 2001 to at least $6 billion to $8 billion today.
“The market for terrorism insurance today is very different than it was a decade ago,” Lehmann contends.
He says modeling firms now offer a suite of products to aid insurers in pricing and underwriting a variety of terrorism risks.
“The catastrophe-bond and collateralized-reinsurance markets also have exploded, offering whole new means to transfer risk,” Lehmann says.
“There’s no question TRIA served to stabilize the market and ensure the availability of terrorism coverage. But if there are opportunities to reduce the government’s role and find more private solutions, Congress should explore every avenue,” he adds.