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HOUSE PROPOSES 15–YEAR TRIA EXTENSION

By Kerri Linden

The House of Representatives passed a measure extending the Terrorism Risk Insurance Act of 2002 by a vote of 312–110. HR 2761 would extend TRIA, a law that gives insurers federal money for claims arising from terrorism, by an additional 15 years. The current two–year extension expires Dec. 31.

The ICSC–backed bill has strong support in the real estate community. “The federal terrorism reinsurance backstop will help keep our economy running in the face of terrorist threats and allow us to recover quickly and efficiently in the event of an actual attack,” said Jeffrey DeBoer, president and CEO of the Real Estate Roundtable, in a press release.

Based upon lender requirements, commercial real estate must be able to obtain terrorism insurance. Without market availability, loans will be in default, the underlying assets will be significantly jeopardized and economic expansion will be stymied. Many shopping center owners continues to have serious doubts about the private market’s ability to function well without the federal program, and the risk of potentially catastrophic terror attacks appears to be as acute as ever.

Norman M. Kranzdorf, senior vice president of retail at Plymouth Meeting, Pa.–based Urdang Capital Management, is another proponent of the measure. “It’s essential to both the real estate and insurance industries, and Congress knows that,” he said. “The question is how long it’s going to take to agree on its content. But TRIA hasn’t cost the government anything, and it’s stabilized the insurance industry, so its prospects are very good.”
The House bill would, beyond extending the current clauses, add group life insurance and broaden the coverage of terrorism to include domestic terror as well as foreign, as well as nuclear, chemical and radiological attacks, under certain conditions. Federal aid would kick in when damages reach $50 million, down from the current $100 million.

Observers say the Senate will introduce its own version soon. “All the proponents of TRIA, including ICSC and property owners like myself, are tickled to death that this has made the first step in being passed by the House,” said James E. Maurin, SCSM, founder and principal of Covington, La.–based Stirling Properties. “We’re hopeful that there will be terrorism insurance that can serve the entire real estate community.”