CBO Testimony - Federal Terrorism Reinsurance
Abstract
The Terrorism Risk Insurance Act, enacted in November 2002, created a temporary federal reinsurance program to transfer most of the risk of financial loss from acts of terrorism to taxpayers. At the time, the attacks of September 11, 2001, had made insurers less willing to provide terrorism coverage because of uncertainty about the risk of future losses. Policymakers feared that a shortage of terrorism insurance could expose property owners to uninsured risk, slow down commercial construction, and reduce economic activity. Indeed, anecdotal evidence suggested that some large construction projects had been canceled or delayed in part because of the lack of terrorism coverage. Many analysts expected that, in time, insurers would reassess the risk of terrorism, raise capital, and reenter the market. TRIA was intended to fill the gap in the supply of terrorism insurance, at least until private insurers could recover.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 14, 2005
- Accession Number
- AD1134757
Entities
People
- Douglas Holtz-eakin
Organizations
- Congressional Budget Office