Congressional leaders are pledging to restore a terrorism insurance backstop program that made workers compensation and other insurance coverages affordable and available post 9-11 to employers in areas considered at high risk for attack.

The U.S. Senate declined to renew the Terrorism Risk Insurance Act (TRIA) before adjourning on December 18 and the law expired on December 31. The failure to re-authorize TRIA, which came as negotiations broke down amid an unrelated dispute over the licensing of insurance agents and brokers, shocked employers, insurers and some lawmakers who had worked for months to hammer out compromise legislation.

The Massachusetts Congressional delegation unanimously supported the proposed six-year renewal of TRIA.

Leaders from both parties on Capitol Hill, including House Speaker John Boehner and incoming Senate Majority Leader Mitch McConnell, have indicated that Congress will reauthorize TRIA immediately as soon as the House and Senate reconvene tomorrow.

Michael Standing, President and Chief Executive Officer of A.I.M. Mutual Insurance Companies, said the loss of TRIA not only affects cases in which an insurer writes workers compensation coverage directly for an employer, but also assessments that insurers might face through state assigned risk pools.

“The federal backstop remains important to help workers compensation insurers pay losses in the event of a large terror loss,” Standing said.

“Workers compensation insurers can’t exclude or limit terrorism-related coverage, can’t charge an adequate premium,  and can’t predict when, where or how large a terror loss might be.”

Non-renewal of TRIA may have devastating consequences for employers.

Large workers compensation policyholders in so-called target cities, including Boston, will likely find fewer insurers willing to cover them. A large number of employees in one place in a target city equals large workers compensation loss exposure to a terror event – unlimited medical exposure and wage replacement paid to widows or permanently disabled employees.

Moreover, many existing commercial loans – projects completed, being built and being planned – are written with a provision that property insurance coverage be in place, including coverage for terrorism losses including TRIA. Real estate owners and insurers have said that mortgage defaults might result if TRIA is not renewed. Work shutdowns on large projects might occur.

The trade publication Property/Casualty 360 reported that there were legitimate concerns that the workers’ comp marketplace in New York City would be in chaos by the fourth quarter of 2014 as brokers scrambled to place coverage beyond January 1, 2015.  But the chaos did not materialize – some carriers pulled back in certain geographic locations, but others stepped up to take their place. Ultimately, employers were still able to obtain workers’ compensation coverage in the private marketplace.

Carriers are writing coverage in terror-exposed geographies and will continue to do so as long as the promise of a re-authorization exists and negotiations are completed early in 2015.  Willingness to continue writing coverage in the private market will wane and eventually disappear the longer the uncertainty surrounding re-authorization exists.  It is imperative this coverage is re-authorized quickly.