Terrorism Risk Insurance Act to Be Extended Again?
By Robert Higgs • Wednesday October 5, 2011 8:31 PM PDT • 2 Comments
Six years ago, I wrote about the extension about to be made to keep in force the Terrorism Risk Insurance Act (TRIA), first enacted in 2002 in the wake of the events of 9/11 and the panic those events created. As usual, opportunists of all stripes rushed to take advantage of the crisis, and among them were various interested parties seeking what amounted to a government takeover of the commercial property-casualty reinsurance industry, creating a de facto subsidy for the purchasers of such reinsurance and the underlying insurance policies.
Life goes on, the clock keeps ticking, and such “temporary” expedients, unless enacted without an expiration date, come up for renewal. So, TRIA, having been extended in 2005 and 2007 and now due to expire in 2014, is again under consideration for—whuda thunk?—still another extension. The general public knows nothing about this matter. Call in the usual suspects to do the lobbying for and against a new extension.
As I wrote before, this refuse-to-die subsidy, originally justified by the foolish rationale that the government subsidy would only fill the gap until private reinsurers got their act together again for the new, post-9/11 circumstances, refuses to go away, playing its part as another manifestation of the ratchet phenomenon by which each emergency creates new laws, policies, and institutions that endure long after the crisis that provoked them has subsided or disappeared. Terrorism has caused not a single property loss worth mentioning in this country since 9/11. But what the hell: Why not justify your subsidy by hauling out an excuse that the public has proved time and again in the past ten years it will swallow without choking?
HT: Matthew Glans, Heartland Institute Insurance Briefing, Oct. 5, 2011.
Featured image via Duminda Jayasena