The bickering and stand-offs that the 113th Congress will be remembered for left lots of unfinished business and half-done measures. Rather than tackle the difficult but important task of comprehensive tax reform, for instance, the last Congress extended a long-list of “temporary” special tax breaks, retroactively applying them to 2014. We still don’t have a long-term transportation reauthorization. And of course, in passing the “cromnibus” spending bill, Congress only appropriated enough funding for the Department of Homeland Security to make it through the end of March.

One item that never made it across the finish line in the 113th Congress was the extension of the Terrorism Risk Insurance Program. The Terrorism Risk Insurance Act, or TRIA, was signed into law in 2002, in the wake of the tragic, catastrophic losses after 9/11. The program was intended to provide a temporary backstop for insurers by providing subsidies and other supports to allow a private terrorism insurance market to develop to meet the demands of business. The initial authorization was through 2005, but the program was extended in 2005 and again in 2007. The last extension called for the program to expire on Dec. 31, 2014.

All through the fall, the program’s boosters predicted dire economic consequences if it was not extended. Business would be crippled by the unknown risk of uninsured terrorist attacks. Some speculated that the Super Bowl might be canceled, that commerce would be indelibly damaged. So when Congress failed to extend the law before it adjourned earlier this month, predictions of market place disruption were heard loudly in the Capitol.

Indeed, there has been a shift in the marketplace. But it wasn’t the shift Terrorism Risk Insurance Program supporters predicted. Earlier this month, the private insurance group XL announced it was offering terrorism insurance to its clients whether or not the Terrorism Risk Insurance Act is extended. XL added coverage from nuclear, biological, radiological or chemical attacks – a new private product. Another company, Ironshore, also announced standalone terrorism coverage. 

The market analysts at Standard & Poor's indicated there is interest and capacity in the private market to offer reinsurance for terrorism coverage (although that coverage is not likely to provide the same level that was available through the Terrorism Risk Insurance Act). Finally, in the worker’s compensation sector (state requirements for providing this coverage was often cited as a need for the the Terrorism Risk Insurance Act) there is evidence that the market has been adjusting and insurance is available.

Our opinion at Taxpayers for Common Sense has been that Congress should reform the program more significantly than proposed in the extension that failed in the 113th Congress. Now we see evidence that should make the 114th Congress rethink what the House and Senate mostly agreed to in the 113th. Clearly there will be impacts with the expiration of the program. There may be some price and availability issues, but it does appear the market is responding in a predictable and good way. That means Congress should pursue a much shorter extension of two to three years, increase the industry retention level and charge premiums. Instead of stifling these developments, Congress should nurture them and let the market take more of the risk off of taxpayers.