In one of its first major legislative actions, the 114th Congress last week passed a six-year reauthorization of the Terrorism Risk Insurance Act (TRIA), a critical piece of legislation sought by commercial property owners after the program’s expiration on December 31st.
Had TRIA not been reauthorized, it could have had the very real impact of stalling commercial real estate development around the country, as it allows the federal government’s to serve as reinsurance backstop program for terrorism insurance.
While both chambers of Congress widely supported a TRIA extension last December, an objection raised by GOP Senator Tom Coburn (OK) kept the bill from coming to the floor for a vote just before the chamber adjourned for the year. When the Senate finally took up the legislation last week, it rejected an amendment by Massachusetts Democrat Elizabeth Warren that sought to strip a provision added by House Republicans to soften restrictions of Dodd-Frank financial reform law.
The Terrorism Risk Insurance program was created a little more than a year after the Sept. 11, 2001, terrorist attacks, and enabled the federal government to pay for most losses above $100 million suffered by businesses in any terrorist attacks. Without the backstop, most insurance companies are unlikely to offer terrorism risk coverage, seriously jeopardizing the lending environment for commercial real estate.
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