Following 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. Read more…
The U.S. Senate voted 93-4 yesterday in favor to pass the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) following passage of the same version of the bill (H.R. 26) in the House on Wednesday. Thursday’s vote ended weeks of anxiety for buyers of terrorism insurance caused by the Senate’s failure to reauthorize the bill on December 31st, 2014. Once signed by President Barack Obama, the law extends the federal terrorism reinsurance program for six years.
The bill includes several changes with respect to the reinsurance mechanics of the Act, none of which are expected to impact insurance buyers:
- Program Trigger phased in increase starting on January 1, 2016 by $20 million per year:
- 2015 – $100 million
- 2016 – $120 million
- 2017 – $140 million
- 2018 – $160 million
- 2019 – $180 million
- 2020 – $200 million
TRIA Set to Expire on December 31, 2014 Senate Fails to Reauthorize
The insurance industry and policyholders of TRIA coverage were shocked by the news that the U.S. Senate failed to reauthorize the Terrorism Risk Insurance Act (“TRIA”) before the 113th Session of Congress adjourned for the year at midnight on December 16th.
What does this mean for buyers of insurance?
Since the Senate failed to either extend or reauthorize TRIA, the backstop it automatically provided to insurance Carriers will cease as of December 31, 2014. However, some Carriers have provided buyers with policies that contained special provisions would continue to provide the coverage in the event that TRIA expired and that continues through the end of the policy period. While it’s unclear how the industry will respond during the coming year, certain Carriers have stated that they will continue to provide coverage, even without a formal provision in effect. Read more…
With TRIA set to expire on 12/31/14, the future of terrorism coverage remains among the most highly-anticipated and talked-about issues throughout the insurance industry. As we enter the final quarter of 2014, insurance carriers are facing uncertainty about how coverage will be handled should the act not be reauthorized. With Congress not back in session until mid-November, the clock is ticking for lawmakers to come up with a solution before the end of the year. Based on discussions with insurance professionals and carriers, one of the following three scenarios will likely determine the future of TRIA. Read more…
Amid growing concern over TRIA/TRIPRA’s expiration on 12/31/14 and the government’s long-term commitment to a Federal Backstop program, many Worker’s Compensation carriers have are thinking ahead when it comes to renewals and securing new business.
When Congress extended TRIA in 2007, it also revised the definition of “acts of terrorism” to include domestic terrorism. Domestic Terrorism has three components:
- All acts of terrorism outside the scope of the Act or the Foreign Terrorism Premium with an aggregate workers compensation losses in excess of $50 million.
- Earthquake: The shaking and vibration at the surface of the earth resulting from underground movement along a fault plane or from volcanic activity where aggregate workers compensation losses from the single event are in excess of $50 million.
- Catastrophic Industrial Accident: Any single event resulting in aggregate workers compensation losses in excess of $50 million.
With the Terrorism Risk Insurance Act (TRIA) set to expire on December 31, 2014, buyers and carriers of terrorism insurance must be on the lookout for marketplace changes and disruption if Congress opts to let the federal backstop program expire. As speculation continues about the Act’s renewal, the terrorism marketplace is starting to shift from one that has been relatively steady with abundant capacity to a much more aggressive and opportunistic arena. Experts say that the Act’s uncertainty means stand-alone rates could also jump by at least ten percent, while embedded terrorism insurance rates could potentially spike if the U.S. Government halts TRIA coverage.
As we approach yet another possible extension or expiration of the Terrorism Risk Insurance Act (TRIA), set to expire on December 31, 2014, it’s a good time to revisit the details of the law and the coverage that it provides.
As a reminder the latest version of the three bills – TRIA (2002), the Terrorism Risk Insurance Extension Act (TRIEA 2006) and the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA 2008) – contains the following provisions:
- Covered loss must exceed $5 million to “qualify”
- TRIA loss must be certified by the Secretary of State, Treasury Secretary and the U.S. Attorney General
- Country loss must be in excess of $100 million in an annual period Read more…