“The federal program that provides insurance against the risk of terrorism expired at the end of 2014. Without such a program, taxpayers will face less financial risk, but some businesses will lose or drop their terrorism coverage and economic activity might slow if a large terrorist attack occurs. Last year, the Congress considered legislation to reauthorize the program but shift more risk to the private sector. Other options include limiting federal coverage to attacks using nonconventional weapons, and charging risk-based prices for federal coverage. CBO has examined the likely effects of different approaches on the private sector and on the federal government. The September 11, 2001, terrorist attacks resulted in nearly 3,000 deaths and roughly $44 billion of insured losses (in 2014 dollars). In light of the unexpected and unprecedented losses from the attacks, as well as the heightened uncertainty surrounding future losses, private insurers subsequently reduced the availability of terrorism coverage for businesses and commercial properties sharply. Policymakers were concerned that without terrorism insurance, commercial developers in high-risk areas would not be able to finance their projects, which would reduce new construction and job creation and thereby slow economic growth. In response, lawmakers enacted the Terrorism Risk Insurance Act (TRIA) in 2002 as a temporary measure to provide catastrophic federal reinsurance for terrorism risks without charging premiums up front. Although no major terrorist attacks have occurred in the United States since 9/11, and thus the government has paid no claims, the threat of terrorist attacks persists, and lawmakers reauthorized TRIA in 2005 and in 2007. The program ensured that primary insurers continued to offer terrorism coverage on business and commercial policies (including workers’ compensation insurance), and it might have reduced the need for federal disaster assistance if an attack had occurred. But, as structured, the program exposed the government to a significant amount of financial risk and subsidized policyholders (many of which were large businesses).”