On December 22, 2005 the President signed into law the Terrorism Risk Insurance Extension Act of 2005 (TRIEA). TRIEA extended, with amendments, the Terrorism Risk Insurance Act of 2002 (TRIA) until December 31, 2007. Recognizing that the war on terror is likely to extend well beyond TRIEA’s expiration, a long-term terrorism insurance solution must be developed. TRIEA recognized this and charged the PWG with preparing a report on the long-term availability and affordability of terrorism insurance that also addresses group life coverage and also coverage for chemical, nuclear, biological, and radiological events. 

MBA will be examining specific long-term terrorism solution proposals based on a set of principles that will ensure adequate insurance for terrorism, as required by the commercial real estate finance lenders and servicers. These principles include:

Widely Available - Terrorism insurance needs to be widely available, which would require the existing “make available” provision in TRIEA be included in a long-term terrorism insurance solution.

• No Interruptions - The long-term terrorism insurance solution should be crafted in a manner that eliminates short-term interruptions in terrorism insurance availability or price shocks when it is implemented.
• Affordable - Terrorism insurance needs to be priced in an affordable manner.
• All-Peril Coverage – Terrorism insurance will cover all-perils including nuclear, biological, chemical, and radiological threats.
• All Terrorism Sources – Terrorism insurance should cover both foreign and domestic source terrorist events.
• Lender/Servicer Notifications - Lenders/servicers are listed as mortgagee, loss payee and additional insured depending on the loan documentation and as such they are entitled to specific notifications of coverage lapses, gaps, and renewals. Any long-term solution needs to preserve and implement the required notification. MBA has suggested that the National Association of Insurance Commissioners issue a Model Bulletin recommending every state require the use of ACORD 28 in order to promote the widespread use and communication of coverage between the insurance industry and lenders and servicers.

As the nation’s largest representative of commercial real estate mortgage lenders and servicers, MBA stands ready to provide any assistance that the PWG may require to ensure that any long-tern terrorism insurance will protect the largest property stakeholders. MBA looks forward to the opportunity of partnering with the PWG and the insurance industry to help develop a long-term solution for terrorism insurance that makes coverage inclusive, available and affordable. 

Click here to view a copy of the letter.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.