The Boston Marathon bombings last month have prompted a new proposal to extend the federal Terrorism Risk Insurance program, which was established one year after the 9/11 attacks to provide a backstop for private insurers in the event of another major strike.
A bill introduced by Rep. Bennie Thompson (D-Miss.), the ranking member of the House Homeland Security Committee, would extend the program through 2024 — it is currently set to expire at the end of next year.
“The Boston Marathon bombings last month serve as a stark reminder that terrorism and mass violence remain both a homeland security and economic threat,” Thompson said in a statement on Thursday.
The congressman added that a lapse in the program would cause fewer insurance companies to offer terrorism insurance and an increase in prices. He said passing the bill would “ensure much-needed stability and predictability for the business community.”
Insurance-industry groups have applauded the Thompson proposal and touted the benefits of the program.
“This public-private, shared-loss partnership frees up capital for business expansion and has helped assure businesses that there can be orderly recovery following a terrorist event without further economic disruption,” said American Insurance Association president Leigh Ann Pusey.
Lawmakers have debated deductibles and the loss threshold that would trigger the program since it was first created through the Terrorism Insurance Act in 2002, including each time Congress extended the measure — in 2005 and 2007.
The current deductible is 20 percent of an insurers direct earned premium, while the threshold for losses is $100 million. Assistance is capped at $100 billion per year.
Up to $50 billion in insurance claims resulted from the 9/11 attacks, according to estimates from one year after the incident.
A 2007 report from the nonpartisan Congressional Budget Office estimated that the program would have no net impact on federal spending, because the revenues and expenditures would cancel each other out.
Under the program, the treasury secretary, the U.S. attorney general and the secretary of state have to certify an attack as terrorism to trigger the backstop. It was unclear at the time of this report whether the program would take effect with the Boston bombings.
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