Terrorism pools have been set up by governments in a number of countries to mitigate the withdrawal of (re)insurance capacity from the private market following significant terrorism events. The pools were established in reaction to specific threats faced within each country. Each pool generally requires a formal declaration that a terrorist event has occurred to trigger coverage.
The current environment of adequate supply in the (re)insurance marketplace has led some to question government involvement in providing cover for terrorism and whether there is an opportunity for the private market to provide additional capacity. However, as the following examination of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) shows, government involvement is necessary in certain countries to support the terrorism market’s unique characteristics and requirements.