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S. 2244, Terrorism Risk Insurance Program Reauthorization Act of 2014 1 (June 24, 2014)

handle is hein.congrec/cbo1737 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE 0 COST ESTIMATE June 24, 2014 S. 2244 Terrorism Risk Insurance Program Reauthorization Act of 2014 As reported by the Senate Committee on Banking, Housing, and Urban Affairs on June 23, 2014 SUMMARY S. 2244 would extend the Terrorism Risk Insurance Act (TRIA)1 for seven years-through calendar year 2021. The bill also would increase the share of insured losses paid by private insurers under the program and require the Government Accountability Office (GAO) to prepare a report for the Congress that assesses the effects of collecting premiums on insurers that participate in the program. The program requires insurance firms that sell commercial property and casualty insurance to offer clients insurance coverage for damages caused by terrorist attacks by foreign or domestic interests. Under TRIA, the federal government would help insurers cover losses in the event of a terrorist attack under certain conditions, and would impose assessments on the insurance industry to recover all or a portion of the federal payments. The program is set to expire at the end of calendar year 2014; no federal payments have been made under the program since its inception in 2002. There is no reliable way to predict how much insured damage terrorists might cause, if any, in any specific year. Rather, CBO's estimate of the cost of financial assistance provided under the bill represents an expected value of payments from the program-a weighted average that reflects industry experts' opinions of the probability of various outcomes ranging from zero damages up to very large damages resulting from possible future terrorist attacks. The expected value can be thought of as the amount of an insurance premium that would be necessary to just offset the government's expected losses from providing this insurance, although firms do not pay any upfront premium for the federal assistance available under TRIA. 1. The Terrorism Risk Insurance Act, P.L. 107-297, was enacted on November 2, 2002; the Act was extended on December 22, 2005 upon enactment of the Terrorism Risk Insurance Extension Act of 2005, P.L. 109-144. On December 26, 2007, the Terrorism Risk Insurance Program Reauthorization Act of 2007, P.L. 110-160, extended the program again. In this estimate, CBO refers to the original Act as subsequently amended, as TRIA.

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