Terrorism Risk Insurance Program Authorization Act

Floor Speech

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Mr. MURPHY. Thank you, Mr. President. Let me join my friend Senator Crapo in congratulating the leadership on both the Republican and Democratic side and the leadership on the banking committee for bringing this bill before us this morning. It is, unfortunately, all too rare when we can bring a piece of legislation to the floor that has been worked on by both sides of the aisle and has broad agreement on both sides of the aisle. Of course, as the Senator from Idaho knows, there is nothing partisan about the effects of not reauthorizing TRIA. This is going to affect every part of the country. Republicans and Democrats, people of liberal and conservative persuasions, will ultimately be paying a lot more and losing a lot more because of our failure to get this bill done. So let me again thank Senator Crapo and Senator Johnson for all the work they have done. I was one of the original cointroducers of this bill, along with Senator Schumer and Senator Reid, as well as Senators MENENDEZ, WARNER, KIRK, HELLER, JOHANNS, and BLUNT.

Ultimately, we were educated by what happened in the weeks and months following September 11. In that period of time, the real estate market in large parts of this country--certainly in my part of the country surrounding New York City--collapsed. As a result, $15 billion worth of projects stalled overnight, and we lost about 300,000 construction jobs that were planned to come online--all because the insurance industry decided, with justification, that they could no longer insure for the risk of terrorism. Prior to September 11 we got coverage for terrorism essentially at no cost. But after September 11, again, for good reason, for good cause, insurers, without knowing what their exposure was going to be should there be another attack, decided they could no longer insure for that risk. So, in this sense, it logically fell to the Federal Government to provide that assurance that no matter where one is--whether in Idaho or Nebraska or Connecticut or New Jersey--if a person is building a project and they were the subject of terrorism, they would get a backstop of protection for those losses.

Some said at the time: Why don't we treat insurance, when it comes to protecting for terrorism, the same as we protect against other disasters? Of course, we see these threats as fundamentally different. We can make a decision as to whether we want to live in a part of the country that may be subject to greater risk from floods or hurricanes. So we have grown to accept the fact that we are going to pay a little bit more if we are going to have a house or a business right on the water. And we have a program here by which we mitigate that risk so that it is not extraordinarily different, understanding there is still good reason why people have to congregate in those spaces. But a terrorist attack, frankly, whether it happens in New York City right on the precipice of Connecticut, or in Los Angeles or in a rural environment in the Midwest, is an attack on the United States of America. That is an attack on all of us, no matter what specific geography in which it happens to be located. So that is why we made the decision as a Nation to help backstop those localities that may feel the initial burden of having to reconstruct after a terrorism attack, because we believe it is a national responsibility.

So for the practical reason that there was no longer an ability for the insurance industry to calculate how on Earth they would assess a premium based on the enormous potential loss of a terrorist event, and because of the fact that as Americans we felt as though we should come together and insure against this risk, we passed TRIA initially. Over time we have come together as Republicans and Democrats to reauthorize it.

Now, as time has gone on, we have had a conversation about how to best share this responsibility between the public sector and the private sector, because we expect that private insurers still should, as is their business, pick up some of this cost. So this version of the bill continues along the line of transferring some of this responsibility from the Federal Government and the Federal taxpayers to private insurers. For instance, the underlying legislation continues to have a 20-percent deductible. But after that 20-percent deductible is met, under the previous version of the bill the insurer was responsible for picking up 15 percent of the cost. Under this bill they are going to pick up 20 percent of the cost. So there is a little bit more responsibility built in for the cost of paying out claims after a terrorist attack is picked up by insurers.

There is a provision in the bill which says the Federal Treasury will recoup the costs from insurers of any claims it pays out. It can do that over a long period of time. Previously, it was mandatory to recoup all of that money for claims under $27 billion. Now that number is $37 billion. So we now have a mandatory return to the Treasury of any claims under $37 billion, which is an additional protection for taxpayers as well as an additional responsibility for insurers now because we will collect from the insurers for losses up to a higher amount than the previous law. I think all of this is pretty reasonable.

I wish there were more days such as this and weeks such as this--although maybe TRIA isn't infused with the same kind of politics that other issues such as immigration reform and energy reform and criminal justice reform can be--but

this was made possible by some really hard work by a number of people who knew this was right to do for the country. Speaking as a Senator from a State that has a big stake in the reauthorization of TRIA, I say thank you to all of the people who made this possible and give an advanced shout-out to the House of Representatives which we hope will pass this bipartisan bill in an expeditious manner. Connecticut cares about this because we were, as I said, on the edge of the attack of September 11. We lost dozens and dozens of Connecticut residents in that attack. Our economy was effectively shut down because of the inability to assess this risk throughout the real estate sector surrounding New York City. But we also are home to some of the biggest and, frankly, most responsible property and casualty insurers. The Hartford and Travelers, in particular, have been a big part of trying to figure out a public-private partnership to solve this problem, and this certainly helps them to be able to provide more of a very important product to the rest of the country.

So, again, my thanks to all of those who made this piece of legislation possible. My hope is we get a big vote later today across the aisle, sending a message to the House of Representatives that they can take this bipartisan piece of legislation, pass it, and then get it to the President's desk. Then we can, once again, give some sense of surety to our insurance markets and our real estate market that the United States of America is, once again, going to step up and decide that terrorism, no matter where it happens--whether it is in New York City or in Topeka--is not going to get this country back.

I yield the floor, and I note the absence of a quorum.

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