The program lapsed at the end of 2014 after the U.S. Senate failed to reach agreement on the legislation, which provides a crucial framework for economic recovery in the wake of a catastrophic terrorist attack.
The bill cleared the House of Representatives Wednesday with a similarly strong 416-5 vote, and will now be sent to the White House where it is expected the President will sign it into law.
“TRIA allows the U.S. to maintain a stable terrorism insurance market so employers can invest in properties and create jobs without assuming the risk and liabilities of a terrorist attack,” Chris Polychron, president of the National Association of Realtors (NAR), said. “Additionally, if the program lapse continues, many property owners with existing commercial mortgage balances that require terrorism insurance could be in technical default of their mortgage terms."
Supporters have argued that failure to reauthorize may result in unaffordable terrorism coverage as well as rises in workers’ compensation rates for at-risk cities. Other industries, including insurance, were also predicting severe fallout from discontinuation of the program.
Because loan documents require terrorism insurance over the life of the loan, “CMBS servicers may increasingly force-place coverage from their own carriers,” Jim Auden, managing director at Fitch Ratings told GlobeStreet.com. “This would likely be at a very high cost, if coverage can be found at all.”
“Without timely Senate action, terrorism insurance will become scarce and expensive, causing construction projects to stall, commercial property values to drop and the ongoing economic recovery to slow,” Polychron added.
The U.S. Senate followed in the House of Representatives yesterday, voting to pass a renewal of the Terrorism Risk Insurance Act (TRIA), which authorizes the program for six years.