Five years have passed since terrorists viciously attacked our country on September 11, 2001.  While U.S. intelligence, along with that of our allies, have been diligent in preventing another attack on U.S. soil since that frightful day, the reality is we know the terrorists plan to strike again.  They have said so, many times.   

In fact, one would be hard-pressed to find even one person naïve enough to believe that terrorists aren't plotting numerous future attacks on major U.S. cities designed to kill as many Americans as possible and to destroy our way of life – including our economy which is the envy of the world. 

Currently, with Congress rightly focused on providing our security and intelligence agencies with the tools necessary to thwart future attacks, our politicians in Washington should also be asking the question: how do we safegaurd the economy from future terrorist attacks?

In the days immediately following 9/11, many economists predicted that the U.S. economy would dive into long-term recession.  To the surprise of many, despite a short-term set-back, the U.S. economy actually continued to grow at a fairly steady pace.

Such sustained growth is a testament to the American people who, in the face of fear and sorrow, refused to let the terrorists disrupt their daily routines.   And, it is also a testament to the U.S. insurance industry, which paid more than $33 billion in claims related to the 9/11 attacks.  This allowed businesses to rebuild and keep American workers on their payrolls.  It allowed for construction projects and new business ventures to move forward.  It allowed the U.S. economy to continue to flourish.

However, just as 9/11 changed our view of the world, so to did it force the insurance industry to reassess its traditional risk calculations to include terrorism.  There were two predictable results.  First, many insurance companies excluded terrorism from their policies, because of the inherent unpredictability of such events.  Second, where insurance against the risk of terrorism could be purchased, its cost was prohibitive.  In short, after 9/11, few companies could adequately insure themselves against the risk of terrorism. 

Bottom line, if companies cannot insure against terrorism, the U.S. economy is at risk.  A devastating attack – say, involving nuclear or chemical weapons – could cause such widespread destruction that companies could not afford to restore their operations without insurance.  Obviously, if companies cannot operate, they don't need employees.  So, a vicious economic cycle would be created that could become so destructive that, unless checked, it could threaten the overall economy.

Recognizing the danger of leaving companies exposed to terrorism without insurance, the U.S. Congress took action.  It established the Terrorism Risk Insurance Act (TRIA) of 2002 which provided federal support after private insurers paid all the claims they could absorb. 

This "safety net" established by the federal government provides certainty in an uncertain time.  It gives U.S. companies, and individual investors, confidence that they can and will continue – no matter what.

In the years since Congress enacted TRIA, the security provided by the federal safety net has meant that premiums for terrorism risk insurance have declined, making it more affordable to U.S. companies.  This has provided the certainty necessary for the economy to continue to grow; good news for U.S. taxpayers who would otherwise be forced to foot the entire bill to rebuild if and when the terrorists strike again.  Simply put, the public-private partnership that Congress and the insurance industry devised is working.

There is a problem.  The current Terrorism Risk Insurance Extension Act will expire on December 31, 2007.

In other words, effective News Years Eve 2007, the federal safety net will disappear if Congress does not act to extend TRIA or make it permanent. 

It doesn't take a creative imagination to foresee what will happen if Congress does not extend terrorism risk insurance protections.  Without the federal safety net in place, premiums for terrorism insurance must again skyrocket.  Few companies will be able to afford them and, once again, the U.S. economy – and all U.S. taxpayers – will be exposed to unconscionable risk.

Safeguarding the U.S. economy against future terrorist attacks is as vital to our national security and winning the War on Terror as more direct efforts.  Congress must act to extend TRIA, or better yet, make it permanent.