U.S. insurers are pushing for extending a terrorism risk insurance program created by the federal government in the hope of resisting a potential gap that would force their clients to find alternative coverage.
The Terrorism Risk Insurance Act formed the program, which is set to expire by the end of 2020. The legislation was passed following the Sept. 11, 2001 attacks, when insurance companies faced steep losses, which prompted some insurers to cease offering terrorism risk insurance to commercial buildings.
Under the program, the insurers are required to offer specific coverage types for losses resulting from an event the U.S. government has officially declared as an act of terrorism. Once the losses from an attack exceed an imposed amount, a federal agency will provide a backstop to offset payouts of insurers.
Giant businesses, owners of sports stadiums and other groups use the program to give them financial assurance them against attacks considered by the government as terrorism.
For the American Property Casualty Insurance Association, pushing a timely renewal of the program is a top priority, David Sampson, the CEO of the trade group said in a recent interview. Sampson also wants lawmakers to make the program permanent and give more clarity on coverage for cyber terrorism.
But even if the Congress may not extend the program insurers and brokers are already discussing possible alternatives with commercial customers, who are starting the process of renewing their policies for next year.
Pres. George W. Bush signed into law The Terrorism Risk Insurance Act in November 2002. Congress extended the program in 2005, but since then lawmakers have unauthorized it twice.