The federal backstop for terrorism risk insurance has been re-enacted. TRIA provides for a system of shared public and private compensation for insured losses resulting from acts of terrorism. TRIA establishes a federal program to provide reinsurance protections to insurance companies following insuring against the damages of terrorism. Without this backstop from the federal government, insurers were widely unwilling to provide this insurance. This law ensures the continued financial capacity of private insurers to offer coverage for risks arising out of terrorism. It was originally enacted in 2002 and with its re-enactment Terrorism Risk Insurance will continue to be made available to businesses that would otherwise be unable to obtain insurance protection against future terrorist attacks.
President signs TRIA
President Obama signed the six-year re-authorization of the Terrorism Risk Insurance Act (TRIA) on January 12th.
TRIA Passed in the Senate and the House
The re-enactment of the Terrorism Risk Insurance Act (TRIA), had strong support in the U.S. House of Representatives, which voted 416-5 on January 7th in favor of the re-authorization of this government backstop for insurers’ losses from acts of terrorism. Showing equally strong support, on January 8 the bill passed in the U.S. Senate with a vote of 93 for and 4 against.
Key Changes
One change from the law that expired at the end of 2014 is that the government would reimburse insurers after industry losses reach $200 million, compared with $100 million under the expired law. It also would increase companies’ co-payments to 20 percent from 15 percent and gradually raise the threshold for government involvement.