| The Terrorism Risk Insurance Act (TRIA) is at risk of expiring at the end of the year. |
| Unless Congress votes to extend current legislation by December 31st, 2014, TRIA is set to expire leaving insurers without government resources to help shoulder the costs of payouts after a large-scale terrorist attack for the first time since November 26th, 2002. While both the House and Senate have introduced versions of the bill and there appears to be bipartisan support for reauthorization, lawmakers are not set to return to session until mid-November. Approval of the legislation could come down to the wire. Additionally, Congress is considering a shorter-term version of the program that could extend its life for only six to nine months. TRIA was previously renewed for seven years in 2007. |
| How will this affect my clients? |
We know that without this government backstop the availability, pricing and quality of Terrorism coverage offered will change. Now is the time to discuss this possibility with your clients so they are aware of the issue. Let your clients know that they can expect to see TRIA disclosure notices on renewals, if they haven't already. These disclosures typically address four distinct areas: - Disclosure of Premium - states the portion of the policy's premium attributable to terrorism coverage.
- Disclosure of Federal Participation in Payment of Terrorism Losses - explains that the US Government pays a share of terrorism losses.
- Cap on Insurer Participation in Terrorism losses - indicates that there is an aggregate cap on an insurers participation in terrorism losses.
- Possibility of Additional or Return Premium - warns that premium for terrorism coverage is based in part on federal participation and if that participation ceases, then the premium attributable to terrorism may change.
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| Here's what you can do now. |
- Make sure your clients are aware of the issue.
- If you receive a disclosure notice, take the opportunity to mention and review it with your client.
- Don't hesitate to contact your CRC broker now about a standalone terrorism quote.
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