--> Gill Blog: Congress delays action on TRIA until 2005

Gill Blog

Thursday, October 14, 2004

Congress delays action on TRIA until 2005

Just as it seemed as though lawmakers in the U.S. were on the verge of extending the Terrorism Risk Insurance Act (TRIA) - legislation that ordered the insurance industry to offer terrorism coverage while creating a federal backstop for substantial losses - just two weeks ago, it seems as though the House of Representatives has decided against scheduling action on TRIA before Congress recesses for the year, thereby putting this off until 2005. With a year left before expiry, there are some who are starting to worry.

As the clock ticks down on TRIA (it is slated to expire at the end of 2005), some insurers are already being told to prepare contingency plans, just in case TRIA expires:
"Since the reauthorization of TRIA for periods after Dec. 31, 2005 is still uncertain, it is important to prepare now for both a hard and soft landing when TRIA terminates...Companies should make sure that in an effort to limit their long-term exposure, they don't take any legal missteps in the urban arena"
The rippling effects of non-action could be significant, as suggested in a September 2004 report co-authored by R. Glenn Hubbard, dean of Columbia University's Graduate School of Business, and Bruce Deal, managing principal at strategy consulting firm Analysis Group Inc.
Just allowing the Terrorism Risk Insurance Act of 2002 to expire could potentially reduce U.S. gross domestic product by 0.4 percent ($53 billion); reduce household net worth by 0.9 percent ($512 billion); and reduce job creation by 0.2 percent, (about 326,000 jobs)
It seems reasonsable to assume that given the given the consequences of not resolving this complicated issue, it will be resolved, but really now, let's get on the program people.


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