Marsh & McLennan Companies (MMC), the parent company of Guy Carpenter, strongly supports the reauthorization and modernization of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA). MMC and Guy Carpenter consider the Act to be a model public-private partnership that has provided affordable and widely available terrorism cover. Thankfully, thus far, the federal government has not made any payments under Terrorism Risk Insurance Act (TRIA) and its successors. Non-renewal or a major change in the program would almost certainly affect existing TRIPRA coverage, standalone terrorism pricing and TRIPRA captive programs. In addition, the workers compensation market would be severely impacted from a capacity, availability and pricing basis.
The development in April 2014 of a bipartisan agreement in the US Senate to reauthorize TRIPRA for a further seven years is therefore encouraging news. The full Senate passed their committee’s recommended version 93-4 on July 17, 2014. MMC and Guy Carpenter welcome the bill, which would retain the deductible at 20 percent but increase insurers’ co-pay from 15 percent to 20 percent so that the government covers 80 percent of each insurer’s losses above its retention, with the increase phased in over five years. A second change, again phased in over five years, would see the mandatory recoupment threshold rise from USD27.5 billion to USD37.5 billion, meaning the government would recoup TRIA payments outlaid to insurers when the sector’s aggregate uncompensated losses were below the USD37.5 billion threshold.
In addition to the Senate bill, a separate bill was introduced in the House of Representatives in June (with significantly different terms and durations to the Senate proposal). The House has not yet voted on its version.