October 21, 2025 | BOMA International, Ella Krygiel
Congressional leaders are moving to reauthorize the Terrorism Risk Insurance Act well ahead of its 2027 expiration, with industry witnesses warning that failure to act could freeze commercial real estate financing and derail projects across the country.
At a September 17 House Financial Services Committee hearing, insurance executives and state regulators made a unified pitch for early renewal of the federal backstop program, arguing that even the prospect of TRIA lapsing creates dangerous uncertainty in the market.
What’s at Stake for CRE
“Without TRIA, it would prevent some projects from moving forward,” testified Michelle Sartain, President of Marsh U.S. and Canada, cutting to the heart of the program’s importance for commercial real estate. The stark reality is that lenders frequently require terrorism insurance for deals to close, and without TRIA’s government backstop, that coverage simply wouldn’t exist at scale.
The numbers emphasize why. The September 11 attacks resulted in $40 billion in insured losses, more than the total of all other terrorism incidents in U.S. history combined, according to Connecticut Insurance Commissioner Andrew N. Mais, testifying on behalf of the National Association of Insurance Commissioners. No private insurance market could absorb that level of risk without federal support.
“Prior to 9/11, the concept of terrorism insurance did not exist,” noted Elizabeth Heck, CEO of Greater New York Insurance Companies, testifying for the National Association of Mutual Insurance Companies. TRIA created a market where none existed, and its absence would likely return the industry to that void.
One notable theme from the hearing is that TRIA’s relevance extends far beyond obvious targets like New York City and Los Angeles. Universities emerged as among the largest purchasers of terrorism coverage, with witnesses pointing to the security demands of major college football stadiums and campus events. “Educational institutions need coverage too,” said Baird Webel, a specialist in financial economics at the Congressional Research Service. “TRIA is needed in other places outside of Los Angeles and New York City.” Healthcare facilities also depend heavily on the program, with Sartain noting that without TRIA, healthcare industries would struggle to secure coverage at all.
Why Act Now?
With TRIA not set to expire until 2027, some questioned the urgency of reauthorization now. Industry witnesses had a ready answer: certainty.
“If TRIA were not to renew, after 2026, it would be filled with uncertainty,” Commissioner Mais testified. That uncertainty alone can decrease deal-making, as developers and lenders face questions about whether coverage will be available or affordable when projects break ground.
Sartain argued that early reauthorization “ensures the program runs smoothly,” while Heck warned that without the program, “the federal government would feel the need to step in” anyway, likely in a more expensive and less structured way during a crisis.
The industry also pointed to recent history as a cautionary tale. When TRIA briefly lapsed in 2014, it created immediate market disruptions, according to Heck’s testimony.
How It Works and What’s Next
Under TRIA’s current structure, the federal government acts as a reinsurer of last resort for certified terrorism events. The Treasury Department must certify an event as an act of terrorism, with a minimum threshold of $5 million in losses. Once losses reach $200 million in a given year, the government backstop kicks in, ultimately covering 80% of losses above certain thresholds while private insurers continue to cover 20%.
Critically, the program is designed to recoup taxpayer costs. “Every dollar is paid back,” Heck testified, noting that “TRIA offers virtually no cost to taxpayers” because it’s funded through policyholder premiums and industry assessments.
The program has been adjusted over time to increase private sector participation and reduce government exposure, with thresholds and deductibles rising to push more risk onto insurers’ balance sheets.
Not all testimony was uniformly positive, however. Representative Ayanna Pressley of Massachusetts praised TRIA’s role in helping communities rebuild after attacks, covering both brick-and-mortar damage and employee wages. But she noted the program “could be improved,” citing delays that left Boston Marathon bombing victims waiting weeks or months for coverage on losses.
Jason Schupp, founder of Centers for Better Insurance, raised questions about market concentration, noting that Amazon negotiated a $2 billion terrorism insurance policy while smaller companies face disproportionate costs. Some Republicans reportedly expressed skepticism about the program’s benefits for smaller insurers, while Representative Rashida Tlaib raised concerns about potential discrimination in insurance practices.
The hearing also touched on emerging risks, with witnesses discussing the distinction between cyberattacks and cyberterrorism, which Schupp said “depends on the intent of the actor and the motivation.” As cyber threats evolve, TRIA’s scope may need to adapt.
The strong bipartisan turnout and generally supportive testimony suggests TRIA reauthorization faces little serious opposition, though details about potential reforms remain to be negotiated. For commercial real estate, the key takeaway is that the terrorism insurance program, which has supported the industry for over 20 years, looks set for renewal, offering developers, owners, and lenders the certainty they need to move forward with confidence.
The alternative, as witnesses made plain, would be a return to the post-9/11 chaos when terrorism coverage simply wasn’t available, leaving the market to navigate an uninsurable risk that could stall deals and destabilize property values across the country.
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