NAR Says Terrorism Insurance Law Will Protect Commercial Market
The commercial real estate market and the health of the nation’s economy as a whole will benefit from the reauthorization of the federal government’s terrorism risk insurance program, which President George W. Bush signed into law. The National Assn. of REALORS® has long advocated for passage of the Terrorism Risk Insurance Revision Extension Act to maintain a strong commercial market.
"As the leading advocate for real estate issues, NAR commends President Bush and Congress for enacting the federal terrorism insurance backstop," said NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, CA. "We especially thank Rep. Barney Frank (D-Mass.) and Sen. Christopher Dodd (D-Conn.), the chairmen of the House and Senate banking committees, for their leadership in guiding H.R. 2761 to passage. The potential unavailability of terrorism risk insurance would have had a devastating impact on many commercial financing agreements and could have negatively affected the commercial real estate market."
The terrorism insurance program, initiated after the September 11, 2001, terrorist attacks, has helped stabilize the commercial real estate industry. The new law will extend the program for seven years, covers both foreign and domestic acts of terrorism, retains the "trigger level" at $100 million of damages at which point federal assistance kicks in, and establishes a blue ribbon commission tasked with recommending a long-term private market solution.
"TRIA reauthorization will strengthen the economic security of the commercial real estate market by reducing the uncertainty of terrorism coverage availability and by covering many forms of terrorist activity," Gaylord said.
According to NAR, the best long-term solution should focus on what private markets have been unwilling or unable to do. "The ideal solution must allow businesses to purchase insurance for the most catastrophic conventional terrorism risks; provide adequate insurance capacity in all major commercial real estate markets, particularly in high-risk urban areas; and provide meaningful insurance against all types of terrorism risks," said Gaylord. "We believe this law does much of that."