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AIA Emphasizes Role of TRIA in Maintaining Market Certainty and Stability in Comments to President's Working Group


WASHINGTON, D.C., September 17, 2013 – The American Insurance Association (AIA) has filed its comments on the state of the terrorism risk insurance market with the President’s Working Group (PWG) on Financial Markets.  AIA’s comments emphasize that, given the unique risk of terrorism, TRIA’s public-private partnership remains necessary to provide the stability and certainty to prevent economic disruption. The PWG is required to perform an ongoing analysis and submit a statutory report to Congress on the long-term availability and affordability of insurance for terrorism risk.

AIA emphasized several key features of terrorism that make the risk uninsurable and require partnership with the government.  First, because terrorism involves willful actions by individuals or groups intent on causing maximum harm, it defies the predictability necessary for insurance.  Second, relevant information involves national security intelligence not available to the public, including the insurers that underwrite the risk, the businesses seeking insurance, and the reinsurers and other risk-spreading mechanisms that provide support for the primary carriers.  Third, terrorism is a dynamic risk, so that efforts to harden one target may simply cause the terrorist to shift to a softer target.  Fourth, the threat of an unconventional attack – like a nuclear bomb – brings the potential for catastrophic losses which the industry has no experience in managing on its own.

While AIA welcomes the debate on whether TRIA is the best long-term solution for managing terrorism exposure, its first 11 years have been highly successful.  Rather than “crowding out” private market capacity, TRIA’s public-private partnership has actually enabled commercial insurers to become more comfortable with individually managing terrorism exposures without compromising financial solvency.  But, as Congress examines TRIA, it should not confuse the program’s success with a belief that the industry “skin in the game” should be adjusted upwards.  Any increase in insurer retentions – either through deductibles or co-shares – could threaten the public-private balance currently achieved by the program.

With the current insurer retention levels, TRIA has effectively become a government backstop for the uncertain risks of large-scale terrorist attacks in the United States.  This is a valuable government role and in partnership with the private market ensures that there will be an orderly economic recovery following such an attack. 

A complete copy of AIA’s comments is attached.

AIA PWG Comments on TRIA


The American Insurance Association (AIA) is the trade association for today’s leaders in the property-casualty insurance industry. Our members work each day to protect the American Dream, whether that’s a house, car, business or otherwise. Now more than 150 years old, AIA has an unparalleled record of advocating on state, federal and international issues for insurers and their customers. 

Our membership is comprised of more than 330 companies, collectively writing more than $134 billion in premiums each year.

We have the experience of a veteran organization coupled with the innovative ideas that drive our industry forward. AIA is leading the insurance industry into the second half of the 21st Century… today.

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