Home > Property & Casualty > TRIPRA vs. stand-alone policies: determining your best terrorism defense option

TRIPRA vs. stand-alone policies: determining your best terrorism defense option

stand_aloneFollowing TRIPRA’S reauthorization earlier this month, the federal backstop program is set to continue for the next six years. While the extension provides significant relief for buyers of terrorism insurance, it may also lead to a reduction of capacity due to an increase in insurer retention. As a result, stand-alone terrorism policies may be beneficial for businesses that need broader coverage not reliant on government backing. Stand-alone policies are often cost-effective, competitive and available on a worldwide basis. While every business has specific needs when it comes to their terrorism exposure, those that are subject to any of the risk areas below should consider purchasing a stand-alone terrorism policy.

  1. Major Metropolitan Locations: The geographic location of an organization raises the level of its perceived risk of attack. Companies with operations in major U.S. cities listed under Terrorism Risk Tier I or Tier II should consider stand-alone coverage.
  2. Relevant Exposure: Organizations that are prime targets for terrorism are likely to require policies that go beyond government-mandated coverage and provide higher limits for their specific risks. Stand-alone policies are likely to include broader terrorism definitions that include coverage for certified and non-certified acts of terrorism, as well as incidents that happen both domestically and abroad.
  3. Breadth of Coverage: Companies exposed to terrorist attacks through the use of nuclear, biological, chemical and radiological (NBCR) weapons, sabotage or religious / political or idealogical threats may not have adequate protection under TRIPRA due to policy exclusions and the TRIPRA requirement to have a covered act certified by the US Treasury Secretary, Secretary of Homeland Security and Attorney General.

The legislation passed earlier this month was largely the same as the prior bill with the following exceptions:

  • Program extended for 6 years, expiring on December 31, 2020
  • Program trigger (government backing) increased from $100 million in annual aggregate losses to $200 million. The increase will be gradual with $20 million per year starting in 2016
  • Insurer Co-share will increase from 15% to 20% . The increase will be gradual with 1% per year starting January 2016
  • Federal government recoupment increases from $27.5 billion to $37.5 billion at an increase of $2 billion per year
  • Creation of NARAB (National Association of Registered Agents and Brokers) – once created will be a self-regulatory national licensing authority.

WGA continues to monitor the development of terrorism insurance and the changing exposures, complexities and variances of this coverage. Please click here for more TRIA information.

About the Author

Mary Broderick is a Senior Vice President and Leader of WGA’s Property Practice. Ms. Broderick is responsible for the design and implementation of complex property insurance programs for WGA’s corporate clients’ and has many years of experience working with complicated Business Interruption (BI) and Contingent Business Interruption (CBI) issues.

617.204.6709 | MBroderick@wgains.com | Connect with Mary on LinkedIn

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