The Terrorism Risk Insurance Act (TRIA) is a law that would help insurers cover losses for events that are designated as acts of terrorism and reach levels of insured damage in excess of $27.5 billion. This was in reaction to 9/11 and the impact that this had on the insurance industry. It was signed into law in 2002, renewed several times, and is once again set to expire on December 31, 2014.
After going through extensions in 2005 and 2007, TRIA is finding a different political atmosphere in Congress, and its extension is not as certain this time around. Despite there being only two insurance events to date in the US that exceed the $27.5 billion threshold (9/11 and Hurricane Katrina), the more fiscally conservative House of Representatives is said to be hesitant about another renewal, while the Senate has shown bipartisan support for an extension. Despite this, many of the members of this session of Congress have a fundamental objection to federal government participation in an industry that is traditionally handled by the private market. This leads to the possibility that TRIA faces opposition when it comes time for Congress to actually vote on the extension. There has been some talk that the threshold will be raised in order to get Republican support, however the impact of not renewing could change the insurance marketplace on terrorism. Typically this is simply an add-on to most policies that is procured at very little cost. Without a TRIA renewal, it will become much more difficult and expensive to obtain terrorism coverage- coverage that will likely not be as reaching as we see today.
If TRIA is renewed, life in the insurance industry will continue as it has been for the past 12 years. If it does not, what does that mean to you? Should you procure a separate terrorism policy? Can this be insured at the full limits that most companies enjoy now? To talk through this please call The ALS Group to discuss the options available to indemnify your firm from damages caused by a terrorist attack.
For More Information
Click here to request more information about The ALS Group or to learn more about TRIA.
