Terrorism insuranceAon calls on U.S. to extend expiring Terrorism Risk Insurance Act
Aon plc called on the U.S. government to extend the Terrorism Risk Insurance Act (TRIA), saying that TRIA remains the best solution for handling the terrorism insurance exposure in the United States. Aon says that if the program is allowed to expire, more than 85 percent of insurers will no longer continue to insure terrorism risk. Ultimately, in the unfortunate event of a large-scale attack, the U.S. government would face the full burden of the associated costs of said terrorism.
Aon plc, a global provider of risk management, insurance, and reinsurance brokerage, the other day called on the U.S. government to extend the Terrorism Risk Insurance Act (TRIA), saying that TRIA remains the best solution for handling the terrorism insurance exposure in the United States.
The program, developed after the 9/11 terrorist attacks, created a federal backstop to ensure the availability of risk coverage offered through private markets in the event of a large-scale terrorist attack. As a result, the primary insurance industry has been able to provide affordable terrorism insurance coverage to U.S. businesses across all industries. Aon says that TRIA has enhanced the private market for such coverage and has had a stabilizing influence on the economy overall.
In its written comment to the U.S. Treasury Department, Aon advised that renewal of TRIA will ensure the continuation of a functional market for commercial property and casualty terrorism coverage.
“Today’s successful terrorism risk marketplace relies on the TRIA program. TRIA minimizes price volatility and coverage uncertainty. This makes TRIA reauthorization imperative for our country and the economy,” said Aaron Davis, a managing director with Aon Risk Solutions, the firm’s global risk management business. “Should the program expire, Aon’s market intelligence suggests that more than 85 percent of insurers will no longer continue to insure terrorism risk. Ultimately, in the unfortunate event of a large-scale attack, the U.S. government would face the full burden of the associated costs of said terrorism.”
Ed Ryan, a senior managing director with Aon Benfield, the firm’s global reinsurance business, said, “The main hurdle in assessing and underwriting terrorism risk is that the frequency of loss from terrorism is neither predictable nor random. Therefore, terrorism insurance is unlike any other marketplace risk. The uncertainty surrounding terror risk makes insurance coverage unique and this requires a novel approach.”
Aon’s call for the TRIA extension came when Aon responded to the Treasury Department’s request for comment on the long-term availability and affordability of TRIA, which is set to expire 31 December 2014.
See here for Aon’s response to the U.S. Treasury.
