In the aftermath of the 9/11 terror attacks, the federal government signed the Terrorism Risk Insurance Act (TRIA) into law. As explained by the U.S. Department of Treasury, the TRIA, “created a temporary federal program that provides for a transparent system of shared public and private compensation for certain insured losses resulting from a certified act of terrorism.” Due to the complexities of the Terrorism Risk Insurance Program (TRIP) created under the statute, companies needing to seek coverage should seek advice from an experience TRIA attorney.

Understanding the Complexities of the TRIA and TRIP

As originally enacted, the Terrorism Risk Insurance Act was set to expire at the end of 2005. However, in the decade and a half since, Congress has enacted multiple statutes that have extended the lifespan of the Terrorism Risk Insurance Program created by TRIA. Most recently, the Terrorism Risk Insurance Program Reauthorization Act of 2019 (Reauthorization Act of 2019) extended TRIP through December 31, 2027. In a letter supporting the extension of TRIA, the U.S. Chamber of Commerce wrote:

“Catastrophic terrorism remains an uninsurable risk because its frequency and location cannot be accurately predicted, and its potential scale could be devastating. . . . While TRIA is currently set to expire at the end of 2020, businesses across the country are already beginning to negotiate insurance contracts that extend beyond the current expiration of TRIA. It is vital that Congress work swiftly to reauthorize [TRIA] as soon as possible to help inject certainty into the market.”

Unlike previous reauthorizations of TRIA, the Reauthorization Act of 2019 did not make any substantive changes to the law (with the exception of adding a clause regarding evaluation of affordability for places of worship). Instead, it simply extended TRIA’s provisions into 2020 and beyond. As a result, under the Reauthorization Act of 2019, some of the key aspects of the Terrorism Risk Insurance Program include:

  • The triggering event threshold remains at $200 million through 2027. This is the total amount of losses from a certified act of terrorism that must be paid by private insurance carriers before TRIP assistance becomes available.
  • If the triggering event threshold is met, all insurers participating in the program will be subject to a deductible equal to 20 of their respective earned premiums under applicable commercial policies.
  • Beyond the deductible, private insurance carriers are also subject to a co-pay equal to 20 percent of the excess loss.
  • Total coverage under TRIP will not exceed $100 billion. If losses resulting from a certified act of terrorism exceed this amount, then companies will not be entitled to coverage from the government or their private insurers.

Speak with a TRIA Attorney at Saavedra | Goodwin

The attorneys at Saavedra | Goodwin represents businesses in Florida in all types of commercial and property damage insurance claims. We also represent companies in licensing and litigation matters involving claims against Specially Designated Nationals (SDNs) from state-sponsored terrorist organizations. For more information about our services, please call 954-767-6333 or send us a message online today.