January 14, 2015
TRIA Bill Signed into Law
Established by the Terrorism Risk Insurance Act (TRIA) in 2002 following the 9/11 terrorist attacks, the federal program provides a backstop for terrorism insurance, but expired on Dec. 31 as a result of the Senate failing to come to a final vote to renew the program. Many insureds were caught off guard by this turn of events. So were insurers that rely heavily on the federal TRIA program to provide reinsurance coverage for terrorist acts under various policies.
While purchasing TRIA coverage is typically optional for insureds, many companies consider terrorism coverage a critical part of their insurance program. For insured's located in large urban areas or those that operate certified cargo screening facilities, terrorism coverage is generally considered a must. Other insurance policies, such as Worker's Compensation, do not allow terrorism coverage to be deleted. While some policies have clauses that automatically limit coverage in the event that the TRIA program would cease to exist, other policies have the ability to reduce or remove terrorism coverage, or implement premium increases estimated as high as 45% without federal reinsurance backing in place through the TRIA program.
Fortunately, there is good news. On January 7, 2015, the House of Representatives overwhelmingly approved a bill to extend the terrorism insurance backstop until the end of 2020. The following day, the Senate voted 93-4 in favor of the program that had been allowed to lapse. On Monday, January 13th, President Obama signed the bill into law.
The National Association of Professional Insurance Agents (PIA) Executive Vice President and CEO, Mike Becker stated "The overwhelming votes in both the House and the Senate demonstrate that when it comes to protecting the citizens of the United States against terrorism, there is no partisanship on Capitol Hill. We are hopeful that this forging of bipartisan consensus will serve as a template for dealing with other insurance issues going forward."
The measure that passed on Monday-H.R. 26, the Terrorism Risk Insurance Program Reauthorization Act of 2015-extends the program for six years, gradually increasing the trigger for activating the backstop to $200 million from the current $100 million.
Back to Quest News™