David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President
The future of the federal terrorism insurance backstop continues to dominate the U.S. terrorism (re)insurance market. Despite the reduced risk of a spectacular terrorist attack on the scale of the September 11, 2001, attacks, extremists continue to pursue attacks on U.S. soil and (re)insurers are therefore lobbying to extend the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA). The program is currently due to expire in December 2014 and there is considerable uncertainty at this time as to whether Congress will renew the program or how it may propose to alter its structure. Should TRIPRA not be renewed or if substantial changes are made to the program, it may impact primary commercial lines writers and their ability to provide the same terrorism insurance limits currently offered today. Without TRIPRA, some insurers could withdraw from certain geographical areas or may actually exit lines of business, for example, workers’ compensation.
U.S. insurers are backed by the commitment of the U.S. federal government to provide reinsurance relief and help manage terrorism risks in the country. President George W. Bush signed TRIPRA in 2007, extending the program through to December 31, 2014. The original legislation, the Terrorism Risk Insurance Act of 2002 (TRIA), was a direct response to the attacks of September 11, 2001, and part of a concerted effort to support the American economy. Table 1 outlines TRIA and the changes it has undergone over the years.