Extending TRIA Essential for Business Terrorism Protection
On today’s solemn anniversary of the terrorist attack against our nation, IBHS joins with citizens across the country in remembering those whose lives were lost, and the sacrifices that were made by so many Americans, including the brave first responders and all the families who were affected by this tragedy. Today also reminds us of the importance of being prepared and vigilant in the face of possible future terrorism on our soil.
One of the tools implemented following the attacks in 2001 was the Terrorism Risk Insurance Act of 2002 (TRIA), a federal law that provides federal financial protection against large terrorism acts. The Act created a program that would allow the federal government to share financial responsibility with the private sector in the case of a large event, allowing insurers to be protected in the face of potentially overwhelming claims.
TRIA was put in place because of the unique difficulty that private insurers have in underwriting terrorism insurance. The very nature of terrorism is that it is unpredictable, and virtually impossible to completely mitigate against, unlike natural hazards.
TRIA has been extended twice, and Congress is currently debating extending the Act again, before it expires at the end of 2014. As part of this discussion, the President’s Working Group on Financial Markets requested public comments on TRIA and on the long-term availability and affordability of insurance for terrorism risk. IBHS submitted comments, supporting the extension of TRIA and explaining its benefit to businesses. The deadline for comments ends on Sept. 16. Read IBHS’ Comments.
IBHS stated that without TRIA, commercial policyholders, particularly in large urban areas, near landmark properties or involved in critical infrastructure, would have trouble securing insurance coverage. This would in turn cause real estate and financial conditions to deteriorate in those areas.
IBHS also stated, that while mitigation techniques to strengthen buildings and business continuity plans are important and useful in reducing risk, they are not sufficient to replace the need for TRIA’s financial protection.
The building science community has identified several mitigation techniques to strengthen buildings, but they are not sufficiently comprehensive against terrorist acts for several reasons:
- Security against terrorism tends to be very site- or structure-specific, making it more difficult to identify and implement solutions.
- Many landscape and layout recommendations that have been recommended by experts as providing protection against terrorism are not feasible in urban settings.
- Blast protection devices may not be effective if the pressures exerted on the building are too great.
- Mitigation requires a systems-based approach, not just the strengthening of one component, making it more expensive and harder to completely implement.
IBHS strongly believes that business and community preparedness, just as with natural disasters, makes residents and businesses more resilient and able to recover as quickly as possible from major incidents. However, planning alone cannot fully negate the unique risk created by terrorism, to the point that it can be fully managed by private insurers.
IBHS hopes that its unique perspective as a research organization dedicated to strengthening homes, businesses and communities against disasters will add to this important national discussion.
© 2012 Insurance Institute for Business & Home Safety