Construction industry executives say that major projects could be stalled in the near future if Congress fails to extend the federal terrorism insurance law, which expired on Dec. 31.
The Senate went home for the year without passing the Terrorism Risk Insurance Act (TRIA), which would extend the federal backstop for insurance coverage in the event of a terrorist attack for another six years. TRIA was originally enacted in 2002 in the aftermath of the Sept. 11, 2001, attacks and extended in 2007.
The construction industry's concern is that major stadium, skyscraper and other projects could be put on hold if terrorism insurance policies are canceled, says Brian Turmail, a spokesman for the Associated General Contractors of America,
But construction officials add that if Congress acts quickly in the new year to pass a terrorism insurance package, any near-term slowdown in work won't be significant.
“Rating agencies and markets have not panicked yet,” says Clifton Rodgers, Real Estate Roundtable senior vice president. “I think there is an assumption that Congress will come back and get this done as quickly as they can.”
Still, a new bill will need to be introduced in the 114th Congress, “and it not clear what the specific timing will be,” he adds.
In a 2002 study, the Real Estate Roundtable estimated $15 billion in projects across 17 states were delayed because of a lack of coverage following the heightened concern about terrorism. The White House Council of Economic Advisors estimated that 300,000 jobs were lost.
The current lapse “could apply to construction projects that are either in the process or about to break ground,” Rodgers says.
Steve Hall, American Council of Engineering Companies vice president of government affairs, says, “I don’t think we will feel the effects immediately, but if Congress lingers too long, we are definitely going to feel it.”
The terrorism insurance law has traditionally had bipartisan support. The House passed its version of a TRIA extension on Dec. 10 by a 417-7 vote.
That House measure would help insurers cover losses of at least $200 million resulting from terrorist attacks. Shortly after the House approved the bill, Speaker John Boehner (R-Ohio) urged the Senate to act quickly.
But the legislation was sidetracked in the Senate by an unrelated financial-derivatives provision added to the House bill. The White House and some Senate Democrats opposed the provision. The White House did not threaten to veto the bill, however.