The American Insurance Association (AIA) expressed hope that a Capitol Hill hearing Tuesday focused on U.S. port security will provide federal policymakers with insights about the urgent need to extend the nation’s federal terrorism insurance backstop.
The House Subcommittee on Crime, Terrorism and Homeland Security is examining Department of Homeland Security efforts to secure U.S. seaports and cargo entering the country.
“Clearly, such efforts are a critical part of national security – both physically and economically,” noted Leigh Ann Pusey, AIA’s senior vice president of government affairs. “Unfortunately, our ports and cargo both have become high-value targets for terrorist attacks because, if successful, such attacks could have potentially devastating economic ripple effects across our nation.”
The national terrorism insurance backstop, created by the Terrorism Risk Insurance Act of 2002 (TRIA), expires Dec. 31, 2005. “If Congress does not act to put another national terrorism insurance mechanism in place prior to TRIA’s sunset, the economic safety net that is TRIA will unravel for ports and other commercial enterprises across America,” Pusey cautioned. “Without a healthy terrorism insurance market, our nation’s ability to recover from a catastrophic terror attack would be impeded.”
American businesses rely heavily on international shipping for both intra- and interstate commerce, and the vast majority of America’s foreign trade is imported and exported via seaport. In addition to major seaports (such as those in New York/New Jersey, Norfolk, Miami, Los Angeles, New Orleans and Seattle), ports in the interior of the country, such as in St. Louis and along the Great Lakes, also are at risk.
“If terrorists attack a port, or use cargo as a weapon – either in port or once that cargo has moved out of port via rail, truck, or air – losses could include death and injury, as well as disruption of port operations and movement of goods to and from ships. It is not difficult to imagine such losses totaling billions of dollars from a single attack,” noted Pusey. “Because of TRIA’s backstop, insurance is available today for port property and infrastructure that could be destroyed, disabled or shut down by terror attacks. In addition, longshoremen, ship crews, and others who work at or near ports are protected by workers’ compensation coverage.”
Bipartisan legislation has been introduced in the Senate to continue the federal terrorism insurance backstop for two years beyond its current Dec. 31 end-date, while studying long-term solutions. TRIA extension legislation also was introduced in the House earlier this month.
“Fortunately,” Pusey added, “Both the House and Senate are actively considering both short- and long-term terrorism insurance mechanisms. There is real support for action as soon as possible. We certainly hope that today’s hearing serves as a catalyst for swift congressional action on terrorism insurance.”
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