Terrorism and Insurance Experts Discuss TRIA Reform

Moderated by:

Frank Cilluffo
Director, HSPI


Jeffery Bragg
Director, Terrorism Risk Insurance Program

Dr. Erwann Michel-Kerjan
University of Pennsylvania
Wharton School of Business

Dr. Lloyd Dixon
RAND Corporation

As 2005 comes to an end, so will the Terrorism Risk Insurance Act (TRIA) that was signed into law in 2002. Experts from the insurance industry, federal government and academia gathered at an October 28 HSPI roundtable to discuss short- and long-term solutions to TRIA.

Headlined by Jeffrey Bragg, director of the Terrorism Risk Insurance Program, which oversees TRIA at the U.S. Department of Treasury, the discussion addressed a number of solutions to the controversial legislation. Dr. Erwann Michel-Kerjan of the University of Pennsylvania Wharton School of Business and Dr. Lloyd Dixon of the RAND Corporation also gave remarks to lead off the discussion.

“When they built TRIA, they didn’t build a racehorse, they built a camel,” Bragg said, as he outlined the Bush Administration’s proposal to extend TRIA for two years through the end of 2007 with some minor changes.

He proposed increasing the event trigger from $5 million to $500 million for insurance companies as well as increasing deductibles and co-payments.

TRIA currently provides up to $100 billion of commercial coverage for terrorism losses as a result of foreign attacks in the U.S. But insurance companies are wary of accepting more responsibility because it is difficult for the companies to calculate terrorism risk.

Participants suggested a national commission to examine the issue and debate the ramifications of TRIA expiration and the shared responsibility of the government and insurance sectors. While many of the participants shared differing views on the topic, there was consensus on the urgency to act before the end of the year.

Congress has two pieces of legislation pending in the House and Senate: S. 467, the Terrorism Risk Extension Act of 2005, offered by Senator Chris Dodd (D-CT), and H.R. 1153, the Terrorism Insurance Backstop Extension Act of 2005, offered by Rep. Mike Capuano (D-MA). Both bills call for a two-year extension of TRIA.


The HSPI Policy & Research Forum series is designed to spotlight cutting-edge policy solutions and innovative strategies to some of the most pressing national and international concerns. The Forum features leading officials, practitioners and thinkers in a systematic way designed to better highlight their work and promote a dialogue on effective solutions to current issues.