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What Others Have Said
"Overall, TRIA improves the functioning of private insurance markets and ultimately saves the taxpayers money because it transfers risk for the largest terrorist attacks to the government. In return, the insurance industry is able to play a larger role in compensating losses caused by smaller, and more likely, attacks."
-- Lloyd Dixon, economist, RAND Center for Terrorism Risk Management Policy and co-author of the study, The Federal Role in Terrorism Insurance. October 10, 2007
"As a subset of the commercial mortgage lending industry, the CMBS industry would be directly and immediately affected if TRIA were not in place. Fitch's methodology for rating CMBS transactions assumes insurance coverage, including casualty resulting from terrorism, for the full loan amount. In fact, Fitch has declined to rate some transactions which it believed did not have adequate terrorism insurance.
With respect to currently existing loans, if TRIA were to expire, Fitch would expect to take similar rating actions as it did in 2002, when coverage for terrorist acts was not widely available. At the time, Fitch placed 29 classes from 13 transactions on Rating Watch Negative, indicating that if coverage were not provided, we would view the underlying assets, and the bonds issued based on them, as riskier and no longer as creditworthy as their then current rating indicated."
- Fitch Ratings, October 9, 2007
We thank the Subcommittee for developing a proposed long-term solution which focuses the government role on what the private markets have been unwilling or unable to do: enabling policyholders to purchase insurance for the most catastrophic conventional terrorism risks; addressing NBCR risks; and ensuring adequate capacity in high risk, urban areas. By maintaining a terrorism reinsurance program which preserves the public-private partnership, you have recognized that it is appropriate, necessary and vital that the Federal Government continue to play a role in maintaining the stability of our nation's economy."
- CIAT's Christopher J. Nassetta, Host Hotels & Resorts President and CEO, before the House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, June 21, 2007
We believe that over time the private market may be able to develop enough capacity to address many terrorism risks, but the risk of truly catastrophic events involving both conventional attacks in urban areas as well as NBCR terrorism everywhere will continue to be virtually uninsurable without some sort of Federal program in place.
- Joseph P. Ditchman, Jr., senior vice president of commercial real estate brokerage Colliers Ostendorf-Morris, representing the National Association of Realtors, before the House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, April 24, 2007
Our companies leased the commercial office portions of the World Trade Center site from the Port Authority of New York and New Jersey just six weeks prior to September 11, 2001. Since that terrible day, our entire effort has been focused on rebuilding what was lost
we face no single greater obstacle to our redevelopment efforts than the current lack of terrorism insurance capacity.
Even with the current TRIA extension in place, if we had to go out and buy a builders risk policy today, we are told that there is less than $500 million dollars worth of coverage available in the entire Lower Manhattan market period. Our consultants have also informed us that they see no viable alternative beyond the traditional private marketplace and that without some sort of permanent, workable governmental backstop in place there will essentially be zero terrorism insurance capacity in downtown New York City at the end of 2007.
- Jonathan W. Knipe, General Counsel and Director of Business Affairs for World Trade Center Properties LLC, September 27, 2006
We additionally need to work to develop a comprehensive long-term solution to the problem of insuring terrorism risk, rather than continuing to address the issue on an ad hoc basis every two years and creating unnecessary uncertainty for the marketplace. To the extent possible, I continue to believe that any workable solution should allow for the private sector to underwrite the terrorism risks that it can cover. However, because terrorism risk is a societal problem and because the size of certain catastrophic terrorism risks would likely exceed the resources of the private sector, the federal government will likely need to play some role in this new system.
-- U.S. Rep. Paul E. Kanjorski, U.S. House Committee on Financial Services, September 27, 2006
The contention that TRIA is crowding out private market solutions to the reinsurance situation is absolutely false. TRIA not only is not crowding out private market solutions, it seems to have resulted in more market innovation. Furthermore, TRIA has not negatively impacted the amount of reinsurance available since we last renewed the Act. It is absolutely necessary that we maintain a public-private partnership for these risks in order to keep this insurance coverage available.
-- U.S. Rep. Ruben Hinojosa, U.S. House Committee on Financial Services, September 27, 2006
TRIA is not about protecting the balance sheets of insurers and brokers it is about creating and sustaining a national economy that encourages investment and development
The prospect of TRIAs demise or the periodic renewal or extension of the program every few years is not viable for the long-term. Failure to implement a permanent fix before TRIA expires next year will not only vastly decrease risk transfer options, it will expose the U.S. economy to potentially devastating uninsured economic loss in the event of another catastrophic terrorism attack.
-- Gregory Case, President and CEO, Aon Corporation, September 27, 2006
Many people suggest government should get out of terrorism insurance completely. They say let the free market handle terrorism. At Liberty Mutual, we fully believe in an ideal world free markets are better. Wherever we operate, we push hard for free markets. But terrorism insurance is not a free market. In a free market, providers of products and services compete to sell those products and services. If the terms, conditions, or prices are inadequate, or if the risk of loss is too large, the provider has the option to withdraw. We cannot withdraw from terrorism insurance. In each and every state ... workers compensation must cover all loss from terrorism. If pricing is inadequate, or exposure too great, the only way to avoid the risk, is to completely withdraw from the workers compensation market.
-- Edmund F. Kelly, Chairman, President and Chief Executive Officer, Liberty Mutual Group, September 27, 2006
"America's economy does not have adequate financial protection from
terrorist attacks. Protecting businesses against the economic impact of
a terrorist attack should be part of a robust homeland security
effort."
-- Peter Chalk, lead author of the RAND Corporation's "Trends in Terrorism" study, June 20, 2005
"...the Terrorism Risk Insurance Act needs to be extended and now, not later. Why the urgency? Because companies that are now negotiating insurance policy renewals for next year and beyond are finding that their terrorism coverage will be severely limited or dropped altogether if TRIA is not extended.."
-- U.S. Chamber of Commerce President and CEO Thomas J. Donahue, March 17, 2005
"There are regrettable instances in which markets do not work, cannot work. I have yet to be convinced [that the terrorism insurance market can be made to work]."
-- Federal Reserve Chairman Alan Greenspan, February 17, 2005
"The government has to be the insurer of last resort when it comes to something as severe as terrorism. There is no way that the insurance industry, given its limited capital base, is ever going to be able to absorb something like that."
-- Hartford Financial Services Group Inc. CEO Ramani Ayer, Jan. 27, 2005
Members of Congress speak out on extension of the Terrorism Risk Insurance Act
Read their comments
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