Sen. Elizabeth Warren (D-Mass.) startled fellow lawmakers on Tuesday by describing a commercial real estate terrorism risk insurance program as a "giveaway."
The program, the Terrorism Risk Insurance Act, or TRIA, enacted a year after 9/11, has American taxpayers back-stopping private insurance companies in the event of terrorist attacks.
To make a claim under TRIA after such an attack, the insurer would first pay a deductible.
Warren wondered why the insurers, under TRIA's public/private partnership, didn't pay a modest fee up front.
Many in New York's commercial real estate market rely on terrorism insurance.
The legislation expires Dec. 31 and Tuesday's hearing was about extending TRIA.
"In other forms of insurance, you pay a fee up front," Warren said. "Under TRIA, the government doesn't get any fee up front."
Douglas Elliott, president of The Hartford, speaking on behalf of an industry group, said policies would have to be repriced if an up-front payment was required.
"So in other words, this is just a giveaway program from [taxpayers] that you are not pricing for now," Warren said, explaining that insurers held nothing in reserves for possible TRIA payments to the Government. "[This] raises for me some serious questions about TRIA."
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