Why The Hotel Industry Is So Concerned About Terrorism Insurance Right Now
After the tragedy in Boston earlier this year, we explained the importance of terrorism insurance for hotels: It protects a property and its assets from any damage that results from an act of terror, which in today's world is unfortunately not so far fetched.
The whole concept came about after September 11th when private insurance companies ran for the hills and decided to exclude "acts of terror" from their polices. Former President Bush and the government stepped in and passed the Terrorism Risk Insurance Act (TRIA) to pump confidence back into investors who had grown timid due to the fact that they could lose it all to another attack.
TRIA has been extended twice since its inception back in 2002, once in 2005 and again in 2007. It is now set to expire on Dec 31st, 2014, and the American Hotel & Lodging Association sent a letter to the Senate yesterday pressing for a third renewal. The Senate Banking Committee is scheduled to hold the first hearing on the matter this week.
“Without [TRIA], the lodging industry will face substantial difficulty in obtaining terrorism risk coverage which is often required for securing loans for development projects," the letter said.
If the act doesn't pass and insurance premiums for terrorism coverage are too expensive, there is a chance that hotel development and investment projects could come to a halt. How much effect it will have in reality remains to be seen. We'll be sure to keep an eye on this story and as it moves through the Senate.
[Photo: Dan Suslavich]