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AIA Statement on Housing and Insurance Subcommittee Hearing on TRIA


TRIA Enables a Stable Terrorism Risk Insurance Market

WASHINGTON, D.C., November 12, 2013 - Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), issued the following statement in advance of tomorrow’s Housing and Insurance Subcommittee hearing “The Future of Terrorism Insurance: Fostering Private Market Innovation to Limit Taxpayer Exposure.”

The Terrorism Risk Insurance Act (TRIA) was first authorized in 2002 following the terrorist attacks of September 11, 2001. It was subsequently reauthorized in 2005 and 2007 with broad bipartisan support, and is scheduled to expire on December 31, 2014. Three TRIA reauthorization bills, H.R. 508, H.R. 1945 and H.R. 2146, have been introduced in the U.S. House of Representatives.

Ms. Pusey’s statement follows:

“The Terrorism Risk Insurance Act has worked as intended and should be renewed. Its purpose was to stabilize the market, ensure that private sector terrorism coverage would be widely available, and provide for an orderly recovery in the event of future catastrophic losses.  The partnership created by TRIA has enabled a private market to exist that has provided the certainty and capacity needed while also protecting taxpayer interests.

“Under the program, insurers would have to absorb significant losses -- approximately $30 billion in industry-wide deductibles -- before government steps in. In addition, the government recoups any federal dollars it spends up to the first $27.5 billion of terrorism losses and is enabled to recoup any additional federal share of losses up to the program’s cap.

“The private sector has not developed the financial ability, and the significant levels of capital to create the necessary capacity to cover large-scale losses that result from a terrorist attack.  With private reinsurance capacity of just $6-8 billion and approximately $30 billion in exposure retained by insurers that write terrorism coverage, there remains a significant gap in private reinsurance capacity to handle the peril.  Unlike natural disasters, because terrorism is considered a “directly correlated” risk, it is unattractive to investors who recognize that a significant event would adversely impact the broad financial markets.

“Terrorism remains a unique and uninsurable risk that can only be covered through the public-private partnership offered by TRIA.  We commend the Subcommittee for examining this important issue and remain confident that Congress will renew TRIA in the coming year.”


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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