(Washington, DC) - Legislation championed by U.S. Rep. Gary Ackerman (D-NY) to renew and expand the federal government’s post 9/11 terrorism insurance program—a measure critical to rebuilding Ground Zero—was passed today by the U.S. House of Representatives.  

After the 9/11 attacks, many insurance companies eliminated terrorism insurance from their policies, judging the potential losses from a major terrorist attack to be too great to insure against. In response, Congress passed the Terrorism Risk Insurance Act (TRIA), which created an insurance backstop from the federal government to protect against catastrophic terrorism-related loses. The measure was extended for two years in 2005 and expires at the end of this year.

Ackerman, a senior member of the Financial Services Committee—the panel with jurisdiction over TRIA’s reauthorization—has been a key figure in efforts to win passage of the legislation and successfully sponsored a measure—as part of the renewal—that extends the program to 15-years instead of another short-term extension.

"Failure to extend TRIA would be an absolute disaster because without terrorism insurance, financial institutions will not lend money and developers at Ground Zero and other major sites will simply not be able to rebuild" said Ackerman. "Failure to rebuild at the former World Trade Center site, or any other spot attacked by terrorists, due to a lack of available terrorism insurance would represent another victory for the despicable terrorists who attacked us on 9/11."

Ackerman also negotiated with House Majority Leader Steny Hoyer (D-MD), a solution that fixes the "pay-as-you-go (PAYGO)" stumbling block that the legislation encountered last week when the Congressional Budget Office (CBO) estimated the bill would cost $3.7 billion over five years and $10.4 billion over 10 years. Under budget rules imposed by Democrats, mandatory spending must be offset by cuts in other programs. Hoyer, on behalf of himself and Speaker Pelosi, assured Ackerman in writing that the PAYGO issue would be fixed before the House takes a final vote on the legislation, after the measure goes through conference committee. Without that assurance, Ackerman and his mostly New York group could have ko’ed the legislation on the Floor.

The bill to renew TRIA, the Terrorism Risk Insurance Revision and Extension Act (TRIREA) was approved—by a vote of 312 to 110 —despite fierce opposition from Members of Congress who mostly favored a short-term extension of the program.

In addition to the 15-year extension, there are numerous other new provisions in the bill to renew TRIA that are not in the current law. They include the following:

The bill also contains a vital bipartisan compromise, known as the "reset mechanism," that was crafted and negotiated by Ackerman and is considered imperative to the bill's prospects for becoming law. This agreement will extend lower trigger levels and lower deductibles nationwide in the event of a catastrophic event with insured losses exceeding $1 billion. Under this compromise, in the event of more than $1 billion in loses, the deductibles for any insurance company that pays out losses due to an attack would immediately be lowered to 5 percent, while the nationwide trigger for any insurer for any future event would drop to $5 million. Ackerman also reached agreement with Republicans to extend these provisions when the total losses of two or more attacks that occur in the same geographical area in the same year exceed $1 billion.

Renewing TRIA was the subject of a Congressional hearing held at City Hall in New York City this past March. The Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises heard testimony in support of TRIA’s extension from New York Mayor Michael Bloomberg, Senator Charles Schumer (D-NY) and a panel of leading developers, insurers, reinsurers and real estate investors. The hearing was chaired by Ackerman, who substituted for Chairman Paul Kanjorski (D-PA).

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