The Risk and Insurance Management Society (RIMS) has told a US Senate committee that extension of the Terrorism Risk Insurance Act (TRIA) is vital.

TRIA was introduced in 2002 when terrorism cover fell away following the September 11 2001 attacks. It is due to expire at the end of this year.

The government program, which has already been extended twice, provides reinsurance coverage in the event of major losses.

RIMS President Carolyn Snow told a committee on banking, housing and urban affairs that reauthorisation of TRIA is in the nation’s best interests.

“We believe the availability and affordability of adequate insurance coverage for acts of terrorism is not only an insurance issue, but an economic one.

“By providing a backstop and assuming some of the market terrorism risk as a reinsurer, the Federal Government has freed up capacity in the private market that would not otherwise exist.

“This capacity can then be made available to the consumer at affordable prices, which we have seen in the current marketplace.”

Without a TRIA-style program, RIMS believes many will self-insure because coverage is unavailable or unaffordable – leaving companies and workers exposed.