CBI’s Comments on Treasury’s Request for Comment on TRIA’s Certification Process
Last month U.S. Treasury published a Notice of Proposed Rulemaking and Request for Comments with respect to the Terrorism Risk Insurance Program.
The Advisory Committee on Risk-Sharing Mechanisms (ACRSM) recommended Treasury “establish a petitioning procedure under the Program rules that would permit third parties to request that Treasury commence a certification process under its rules.”
CBI has filed comments urging Treasury not to adopt a process permitting a formal petition for certification of an act of terrorism because:
- Congress intended the Secretary of Treasury to take full personal responsibility for the decision whether to certify an act of terrorism without armchair quarterbacking by corporate interests or second-guessing by the courts.
- Large corporations that have set up captive insurers to tap into the Program stand to receive hundreds of millions or even billions of federal dollars if the Secretary of Treasury decides to certify.
- TRIA currently prohibits Treasury from obtaining information about corporate financial engineering designed to access the Program — meaning petitioners may have massive undisclosed financial interests in the Secretary’s decision.
- In contrast, the Secretary’s decision to certify an act of terrorism would deprive up to 40% of small businesses of otherwise available insurance coverage.
- The interests of small businesses would surely be drowned out by the aggressive petitioning of large corporations looking to tap into federal billions.
These are not hypothetical concerns:
- Following a lone gunman’s killing of 58 and wounding of 489 at the Las Vegas Route 91 Harvest Festival, MGM Resorts International (the operator of the hotel from which the gunman fired on the crowd below) claimed immunity under the SAFETY Act alleging the massacre amounted to an “act of terrorism”.
- Insurers reportedly withheld insurance payments for months after the Boston Marathon Bombings while waiting to see if the Secretary of Treasury would certify the bombings as an act of Terrorism under TRIA (thereby relieving the insurers of their payment obligations).
Congress has taken extraordinary steps to empower the Secretary of Treasury to make what very well could be the difficult choice between saving insurance companies or savings small businesses. No good could come from interjecting corporate lawyers representing billions of dollars in undisclosed financial interests into the process of making such a solemn decision.