Dive Brief:
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Despite pleas from the National Association of Realtors and other trade organizations, it appears that the U.S. Senate will not extend a government program that helps insurance companies cover businesses in the event of a terrorist attack.
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The Terrorism Risk Insurance Act was created in 2002 and is set to expire Dec. 31 unless the Senate renews it for six more years. Sen. Tom Coburn, R-OK, blocked an effort to do that on Tuesday night, saying it could cost taxpayers too much.
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The law, which was never used, backs up insurance companies with a government guarantee to pay 85% of losses after the first $100 million of damages from a terrorist attack. Without the government’s backing, advocates fear, terrorism insurance will become too expensive for construction sites, sports events, convention centers and other large commercial ventures.
Dive Insight:
Without TRIA, insurance companies are likely to raise rates and even refuse to insure those business sectors at adequate levels. NAR President Steve Brown, who noted in a videotaped response to Coburn’s move that the act has “spurred billions of dollars in new construction and created thousands of jobs,” that TRIA is needed to “allow economic development to flourish and keep our commercial real estate market strong.”