U.S. lawmakers are expected to extend the Terrorism Risk Insurance Act
Federal lawmakers in the U.S. claim that the country’s terrorism insurance backstop initiative will be renewed. The Terrorism Risk Insurance Act was enacted in 2002, created in the wake of the 9/11 attacks in the U.S. The initiative is meant to provide insurance companies with a financial backstop for claims that are related to acts of terrorism. The law was also meant to create a transparent system through which information concerning compensation for insured losses was shared with the public. The law has been renewed several times since it was first set to expire at the end of 2005.
Lawmakers are divided on the issue of extending law
In July, the U.S. Senate voted to renew the law, but the House of Representatives has been somewhat divided on the issue. Some lawmakers claimed that terrorism insurance was not necessary, and providing a federal backstop for the insurance industry was a costly issue that required some attention. Representative Paul Ryan, who has supported the law for some time, claims that his colleagues are ready to extend the law once again, but can only do so until 2015.
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Revisions to the law may be needed for an extension to be possible
Some conservative lawmakers want to see some revisions introduced to the law. They would like to see insurance companies take more responsibility for the insured losses they receive from acts of terrorism before federal support kicks in. This would reduce the financial burden that these insurance companies place on the federal government and give insurers a greater incentive to develop products that are able to manage the risks they face more effectively.
Lawmakers support extension of the law, but want to see private insurers take more responsibility
Lawmakers throughout the House of Representatives agree that a backstop is needed in order to adequately manage risks relating to terrorism, but lawmakers are unwilling to displace the private sector when it comes to take responsibility for terrorism insurance. The insurance industry has shown that it can manage risks associated with acts of terrorism with deftness, but insurers are not always inclined to take on more financial stress.