NAIC Seeks Action on TRIA

The National Association of Insurance Commissioners, Kansas City, Mo., has sent a letter to Congress regarding the Terrorism Risk Insurance Act, asking for "Congressional action this year to avoid market disruptions that will occur in the absence of a federal backstop program."TRIA was enacted at the end of 2002 to provide a federal backstop for terrorism insurance coverage on commercial real estate. It is due to expire at the end of 2005, and the NAIC is concerned that "significant market disruption may develop before TRIA's expiration." Policyholders and insurers will have to make decisions this year relating to insurance coverage going into 2006, and they might have to consider a scenario involving no federal backstop in 2006, according to the letter. This means that there could be "widespread introduction of conditional exclusions for terrorism coverage," the NAIC said. The letter is addressed to the chairmen of the House Financial Services Committee and the Senate Banking Committee.