Federal Terrorism Reinsurance: An Update
Abstract
In November 2002, the federal government enacted the Terrorism Risk Insurance Act (TRIA), which created a temporary federal reinsurance program to limit insurers' risk of financial loss from acts of terrorism. At the time, the attacks of September 11, 2001, had made insurers less willing to provide terrorism coverage because of uncertainty about the future risk of, and losses from, terrorist acts. Policymakers feared that a shortage of terrorism insurance could expose property owners to uninsured risk, retard commercial construction, and reduce economic activity in the short run. 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 insurers would need some time to reassess the risk of terrorism, raise capital, and eventually reenter the market. But how long that would take was uncertain. The TRIA program 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
- Jan 01, 2005
- Accession Number
- AD1134761
Entities
Organizations
- Congressional Budget Office