Before leaving for the two week recess, on April 10 a bipartisan group of senators reached consensus on legislation to reauthorize the Terrorism Risk Insurance Act (TRIA). This is great news for apartment owners and developers who are required by most lenders to have a policy in place on existing properties, as well as future development projects. The action comes not a minute too soon with TRIA set to expire at the end of this year.
Introduced by Senators Chuck Schumer, D-N.Y., Dean Heller, R-Nev., Mark Kirk, R-Ill., Jack Reed, D-R.I., and Mike Johanns, R-Neb., the bill extends TRIA for seven years and reforms the program to ensure additional taxpayer protection. It does this by increasing the share of losses the insurer would bear relative to the government share gradually over five years in the event of an attack. In addition, it gradually increases the amount of money the Federal Government would recoup from insurers, after a loss in which the federal backstop was accessed, by $10 billion.
Without an extension, insurance carriers have said they are unwilling to provide coverage past 2014 for a terrorist event, which is problematic because most lenders require terrorism coverage. If the program is allowed to expire, borrowers will most likely face significant cost increases and economic development will slow triggering severe economic instability.
The House is also reported to be drafting legislation to reauthorize the program and related action is expected before Memorial Day. It is critical that these efforts begin quickly so that any differences can be ironed out and a bill enacted before the end of this Congress.
NMHC/NAA have been working with our real estate partners in the Coalition to Insure Against Terrorism to advance legislation as soon as possible. TRIA represents a sound risk sharing program established after 9-11 when the private market refused to offer this coverage. Since the private market remains unable to meet the needs of policyholders it is critical the program be extended. We will continue to call on members to weigh-in with Congress to move swiftly to passage.
Date Posted: April 10, 2014