The new year and new Congress bring countless Wish Lists of "must do" legislation for the year. But before everyone lines up for the next new item of 2015, Congress should - and seems poised to - immediately finish what stalled last year and reinstate the Terrorism Risk Insurance Act (TRIA) for many more years.
Most know what happened as the 113th Congress was closing its doors. After legislation to extend TRIA for 7 years cleared the Senate by a 93-4 vote, the House then passed with 417 yes votes negotiated legislation extending the law for 6 years. Unfortunately despite this strong bi-partisan, bi-cameral support, unrelated issues hitched a ride on TRIA causing the bill to stall as Congress adjourned. Consequently, a primary public policy tool against terrorism came to a halt on January 1.
During its existence TRIA has not cost the government or the nation's taxpayers anything. It has reduced the expected government expense following a terror attack. Important details of the law can and should be debated and reformed as more information about the risks of terrorism become apparent, but this law works and the vast majority of Congress and American businesses want it extended.
Last year's stalled effort to extend TRIA has unnecessarily put America at great economic risk. That's why so many Congressional leaders - including Senate Leaders Mitch McConnellMitch McConnellSunday shows preview: Next steps after Trump upheaval Gun-control supporters plan next steps versus NRA McConnell: Trump needs to act like a 'serious candidate' MORE (R-Ky.) and Harry ReidHarry ReidSay NO to PROMESA, say NO to Washington overreach Overnight Finance: Wall Street awaits Brexit result | Clinton touts biz support | New threat to Puerto Rico bill? | Dodd, Frank hit back McConnell quashes Senate effort on guns MORE (D-Nev.) and House Leaders Speaker John BoehnerJohn BoehnerCameras go dark during House Democrats' sit-in Rubio flies with Obama on Air Force One to Orlando Juan Williams: The capitulation of Paul Ryan MORE (R-)hio), Rep. Kevin McCarthy (R-Calif.) and Rep. Nancy Pelosi (D-Calif.) - wisely have called for quick action on this issue in 2015. Action has now been scheduled in the House for the first week of Congress, and hopefully the Senate will quickly follow as well.
I will leave it to others to discuss the important negative consequences that the loss of TRIA now presents for workers compensation claims. It is potentially staggering.
For businesses, conservative estimates maintain that 1.5 million American businesses last month had terror insurance because of TRIA. Nearly 1 million of these businesses immediately lost their terrorism insurance coverage on Jan 1 when TRIA ended. An additional roughly 600,000 plus businesses will lose their terror coverage when their policies renew over the coming months unless Congress acts. The value of commercial real estate alone losing coverage exceeds $4 trillion.
Countless businesses that lost coverage on Jan 1 nonetheless need to obtain as much immediate coverage as they possibly can find, where ever they can find it. This is because of the nature and location of the particular business and the number of people that come and go from these businesses daily. These businesses cannot wait until Congress acts. They are being forced to search for coverage in an insurance market with dramatically reduced capacity. This is resulting in huge premium increases (as much as 500%) for greatly reduced amounts of coverage (sometimes as little as 20% of what existed before Jan 1). For these businesses the loss of TRIA is very real and damaging in terms of unnecessary costs and unnecessary financial exposure.
Of course any business property coming to market for sale - or any business property seeking refinancing - or any new business property development proposal - now faces a significant new financing hurdle since terrorism insurance will be very difficult, and in many cases simply impossible, to obtain.
Over time it is the stalling or cancellation of these new activities that will result in the most meaningful negative impact on job creation and economic growth. The loss of terrorism insurance in the 14 months after 9/11 and before TRIA was enacted resulted in more than $15 billion of stalled transactions nationwide and an estimated loss of 300,000 jobs.
The economic recovery finally seems to have found traction. Private sector employment continues to strengthen, the housing markets continue to heal, Americans are more confident. Let's not lose this momentum. Congress needs to act and act quickly in 2015 to remove a significant growing cloud over the economy. It must reauthorize and extend TRIA. The potential from inaction for lost jobs, economic activity, and tax revenue at all levels of government is all to clear.
DeBoer is president and CEO of The Real Estate Roundtable.