On Tuesday, June 18, the Senate Banking Committee held a hearing on "The Reauthorization of the Terrorism Risk Insurance Program." This informational hearing included expert witnesses from the Wharton Risk Management School, Marsh, and the Congressional Research Service. Chairman Crapo (R-ID), Ranking Member Brown (D-OH), and the other Committee members present all expressed support for the Terrorism Risk Insurance Program (TRIP), which is set to expire at the end of 2020. Some members, including Chairman Crapo, also raised questions of how to modify the program to further reduce the government's exposure to losses in the event of a terrorist attack. NAR submitted a statement for the record for the hearing which expressed strong support for TRIP, and urged the Committee to enact a long-term reauthorization without disrupting the program.
TRIP was first enacted in 2002, in reaction to the insurance industry no longer offering terrorism insurance coverage following the September 11, 2001 attacks. In the rare event that it was offered, the cost was prohibitively high. Terrorism insurance is a vital aspect of financing for many commercial properties, and without it, many borrowers would find themselves in technical default of their financing agreements. TRIP creates a risk-sharing partnership that allows the federal government and private insurance companies to share losses in the even of a major terrorist attack. It mandates that private insurers make terrorism coverage available along with property and casualty lines, and in return the U.S. government provides a federal "backstop" for losses above a triggering amount ($180 million in 2019, which will go up to $200 million in 2020) from a certified terrorist attack. The program has been reauthorized three times already: in 2005, 2007, and 2015.