News focus - TRIA renewal is not a long-term solution, claims panel.

(From Reinsurance)

The recent move by Congress to extend the Terrorism Risk Insurance Act (TRIA) did not provide the industry with the long-term solution it needs. That's the assessment of experts participating in a recent web seminar sponsored by the Insurance Leadership Institute of GE Insurance Solutions (GEIS).

"The problem with the TRIA extension is that it further dilutes the protections provided by the original act," said Kim Prather, underwriting risk leader for Commercial Insurance, GEIS. "The industry's per-event threshold was raised; several lines of business were excluded; and deductibles were increased. What we didn't end up with was a long-term solution."

Mr Prather joined Frank Nutter, president of the Reinsurance Association of America (RAA), and Joanne McMahon, assistant general counsel for government relations at GEIS, in a discussion on the extension of TRIA and what it means for the insurance industry.

He added that with the diminishing involvement of the government as a provider of a federal financial safety net, the TRIA extension could raise potential solvency concerns in the event of a terrorist act.

"We're still left with an inability to underwrite and price for the exposure - due to largely insufficient data," Mr Prather said.

He explained that the industry still doesn't have the ability to reserve against terrorism losses adequately. "We don't have domestic terrorism included in the coverage either," he said.