The Consumer Federation of America on Tuesday sent a letter to the members of the US Senate Banking, Housing and City Affairs Committee, and urged them not to extend the federal terrorist insurance backlog that expires at the end of next year.
In his letter, J. Robert Hunter, CFA Director of Insurance and Former Insurance Commissioner in Texas and Federal Insurance Commissioner, said that the insurance industry "has the capacity to insure property against losses of terrorism without continuing the massive taxpayers' subsidies provided under TRIA, "Terrorism Risk Insurance Act."
The Rehabilitation Law of the Terrorism Risk Program of 2015, an extension of the original TRIPRA 2007, expires on December 31
CFA claims that the industry has plenty of resources for
"We believe the program is no longer needed," said Mr. Hunter in his letter. "By the end of 2018, the surplus of the real estate / non-life insurance industry (the amount that spends money on insurance companies) amounted to 742 billion dollars, according to information from the Insurance Services Office and American Property Casualty Insurance Association. Before the 9/11 attacks, the industry's surplus was $ 326 billion, or only 44% of the current surplus.
"The current industry surplus of $ 742 billion overcomes $ 27 billion (in $ 2019) of insurance companies' losses from 9/11. Even in the extremely unlikely event of a claim or a series of claims a total of four times greater than 9/11 is industry economically placed to deal with the losses. According to TRIA's current rules, we estimate that insurance companies would be responsible for about $ 85 billion of losses before the federal reinsurance kick in. Without TRIA, the industry would account for another $ 23 billion, a total of $ 108 billion for such an extraordinary event or series of events. It is well within the insurance industry without the need for a federal rescue operation. "
In addition to inviting Congress to terminate the TRIA program, CFA offered two alternative proposals. One proposal is to eliminate TRIA and replace it with a mechanism in the Federal Emergency Management Agency, designed to respond to the details of such an extreme event and to provide taxpayer coverage for a terrorist act only if and after the industry surplus is reduced by 30%. Another option is to renew TRIA's backstop for insurance companies, but requires companies to pay a premium for the reinsurance, according to the letter.
"At a time when public budget deficits and high insurance surpluses have been record all the time, we question the wisdom of providing billions of dollars to an industry that can easily afford to insure more terrorist events even greater than 9/11. says Hunter in his letter