Shift More Risk & Cost To Insurers If TRIA Is Extended, AAF Research Recommends

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Policymakers should continue to shift risk and cost to insurers if the Terrorism Risk Insurance Act (TRIA) is extended, a new report from the American Action Forum (@AAF) recommends. TRIA, a federal reinsurance program which allows insurers to share losses with the government in the event of a catastrophic event, is set to expire at the end of 2014.

Other recommendations in the AAF research include:

  • Increases to the risk and cost sharing mechanisms,

  • Providing markets with forward guidance that outlines incremental and predictable increases for the next 5 to 7 years to the deductible, as well as other mechanisms of the program, and

  • Including a “safety valve” in which a majority of Congress could delay increases under certain circumstances.

“By laying out modest but predictable increases, Congress can move toward the eventual outcome of a de minimus federal backstop and a vibrant private market,” concludes Satya Thallam, AAF’s Director of Financial Services Policy.

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