Heftier premiums coming for terrorism insurance?

Policies likely to be repriced if carriers are required to pay up-front fees
February 26, 2014 08:40AM

U.S. Senator Elizabeth Warren of Massachusetts referred to the terrorism insurance program — on which New York City’s commercial real estate market depends – as a “giveaway.”

The Terrorism Risk Insurance Act, introduced after 9/11, financially subsidizes insurers in the event an act of terrorism leads to exceptional damages on a property. Some have said the federal program is essential for landlords because it provides them with reasonably priced terrorism insurance. TRIA is set to expire at the end of the year.

The Real Estate Roundtable and the National Association of Real Estate Investment Trusts, both industry organizations, have lobbied for an extension of the legislation.

“In other forms of insurance, you pay a fee up front,” Warren said at a hearing yesterday on extending the act, as cited by the New York Post. “Under TRIA, the government doesn’t get any fee up front.”

Douglas Elliott of insurance company the Hartford said, if an up-front fee was required, policies would subsequently have to be repriced. [NYP]Mark Maurer