Trends in Transnational Terrorism and Implications for U.S. National Security and U.S. Terrorism Risk Insurance Act

• NCJ Number: 220157
• Journal: Studies in Conflict and Terrorism Volume: 30 Issue: 9 Dated: September 2007 Pages: 767-776
• Author(s): Peter Chalk
• Date Published: September 2007
• Length: 10 pages
• Publication Format: Article
• Publication Type: Legislation/Policy Analysis
• Language: English
• Country: United States of America

Annotation

This article examines the issue of terrorism risk insurance in the United States and argues that the Terrorism Risk Insurance Act (TRIA) in its current formulation is not robust to an evolving threat, needing both extending and expanding to provide a viable system of security.

Abstract

Although the Bush administration has committed to renewing the Terrorism Risk Insurance Act (TRIA) until the end of 2007, there is presently little indication that Washington will contemplate further extensions of the legislation beyond this date, largely because government solutions in this particular area are not supported by key people in Congress and the administration. It is arguable that both the higher deductibles (up from 15 percent to 17.5 percent) and elevated event triggering thresholds (which, by 2007 will have risen to $100 million) that have been build into the post-2005 version of the Act are already reflective of preparatory moves to shift the burden of underwriting terrorism risk away from the Federal Government back to the market. Allowing TRIA to sunset in 2007 would be sure to drastically raise the cost of terrorism insurance as companies try to forestall their own exposure to insolvency and seems inadvisable. However, any long-term solution to providing terrorism insurance in the United States will necessarily need to go beyond the Act’s existing framework, both by dropping the “foreign interest” designation for certified attacks and by incorporating some sort of supplemental program to include mandatory coverage for chemical, biological, radiological, and nuclear (CBRN) assaults. In addition, an oversight board should be established to systematically review TRIA’s performance and validate provision relevancy. Passing and renewing of the TRIA provided for a viable financial recovery system to offset costs that might result from future cataclysmic terror strikes. 31 notes