Super Bowl XLIX in Glendale, Ariz. in February 2015 can be possibly canceled due to the expiry of an insurance law known as TRIA, per BusinessWeek.com.
Bad news for NFL fans: Super Boxl XLIX in Glendale, Ariz. can be canceled.
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According to a Dec. 9 update by Howard Kunreuther and Erwann Michel-Kerjan of BusinessWeek.com, congress must act swiftly to renew a piece of legislation known as TRIA or the Terrorism Risk Insurance Act. If it isn't renewed, the big game on Feb. 1, 2015 can be called off.
TRIA was enacted in 2002, just months after the infamous 9/11 terrorist attacks on NYC's World Trade Center. It established "a risk-sharing partnership between the federal government and the insurance industry that made terrorism insurance widely available to U.S. businesses -- among them, organizers of sporting events. Without federal support, most insurers had been unwilling to offer coverage," per Kunreuther and Michel-Kerjan.
TRIA has been renewed twice (2005 and 2007) since its enactment. It will expire on Dec. 31, 2014, per Business Week.
Kunreuther and Michel-Kerjan say the possibility of Super Bowl XLIX getting canceled is as real as it gets. They cite the example of the final game of the 2006 FIFA World Cup. The organizers were hard pressed to find insurers to cover that game. If they failed, then it would not be a go. FIFA eventually came up with a "special financial instrument" to prevent this. The game went on, but the process to come up with a solution took several months.
To further boost the renewal of TRIA, the NFL joined forces with other professional sports leagues and 80 business groups to form the Coalition to Insure Against Terrorism (CIAT). Many insurers balked at including terrorism as part of their coverage because of the sky-high costs they incurred after 9/11. Prior to the terrorist attacks, these insurers charged terrorism coverage for free "because the risk was below their threshold level of concern," says Kunreuther and Michel-Kerjan.
However, the insurers shelled out an astonishing $44 billion in claims for 9/11. The Business Week update says this left them with no choice but to exclude terrorism from their policies.
TRIA rectifies this issue. Kunreuther and Michel-Kerjin says this program has the federal government providing "a financial backup for insurers by covering a portion of insured losses above $27.5 billion, up to $100 billion, giving the insurance industry some certainty as to its maximum exposure. In return, insurers are required to offer terrorism coverage to all business clients, which can decide to purchase coverage or not. About 60 percent of large businesses carry terrorism insurance, indicating strong demand for it."
Should TRIA not be renewed, insurers can opt to cancel terrorism insurance policies after Jan. 1, 2015. Kunreutehr and Michel-Kerjin stress this will most likely be the case as they can go bankrupt in the event of a terrorist attack with no government financial backup. Insurers which offer workers' compensation insurance are the ones who are obliged to include terrorism in their coverages. They can limit their terrorism exposure by canceling some commercial policies.
If TRIA eventually gets renewed before Dec. 31, it will be enacted for another five to seven years, per Business Week.
In another development, a regional economic development program known as the CEO Forum has 50 CEOs and other corporate executives getting free Super Bowl XLIX tickets in order to encourage businesses in Arizona. The CEO Forum is composed of the Arizona Super Bowl Host Committee, Arizona Commerce Authority and Greater Phoenix Economic Council. Mike Sunnucks of The Phoenix Business Journal reported the development on Dec. 16.
The visiting executives will be listening to business pitches during their stay in Glendale for Super Bowl XLIX on Feb. 1, 2015. They will also look at exploring the local area for possible expansion of their respective businesses, says Sunnucks.
The Phoenix Business Journal update says the tickets range from $600 to $1,200.
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