Obama’s FY 2011 budget proposes to decrease the federal subsidy for the terrorism risk insurance program by $250 million. Congress reauthorized the program for seven years in 2007 (P.L. 110-160).
The Administration based its proposal on Q3 2009 reports that the property and casualty markets were better able to absorb losses from a terrorist attack.
Additionally, the proposal encourages the private sector to mitigate terrorism risk through other means such as constructing safer buildings. Similar reductions were proposed in the 2010 budget proposal but were not acted on by Congress.
NAA/NMHC oppose the provision and will argue that such stability is the result of the federal backstop; to withdraw support now would have a negative impact on future affordability and availability. Since the President’s budget serves only as a blueprint and the actual budget must be adopted by Congress, NAA/NMHC will urge Congress to reject any attempts to scale back federal support for the Terrorism Risk Insurance Act.