An extension of the 2002 law, which is set to expire at year-end, would also give Congress and the private sector adequate time to develop a long-term solution to the problem, according to a Fitch report. "There are no guarantees that availability of coverage will not be as serious a problem as it was before TRIA passed, which underscores the importance of a long-term solution," says Fitch Ratings director Richard Carlson.
Carlson also warned that the lack of a federal backstop allowing insurers to measure risk "could make pricing an issue again and lead to larger-than-expected increases in terrorism insurance premiums, which in turn would greatly affect large, high-profile properties in major metropolitan areas where premiums would increase substantially."
Senator Charles Schumer (D-NY) has said that uncertainty over TRIA's future is already beginning to slow the pace of U.S. real estate market activity. "I can tell you, not just in New York, which is the epicenter for this, but in other areas, you're having projects now slow down" in anticipation of a possible expiration of the law on Dec. 31.
Treasury Secretary John Snow, whose department is reviewing the law, has indicated the final review will be submitted to Congress "well in advance" of the June 30 deadline. Schumer said this could allow the Senate to pass bipartisan TRIA extension legislation (S. 467) by July 31, before the August congressional recess.
