2.3 FEDERAL TERRORISM RISK INSURANCE ACT (TRIA)

Question 1

TRIA purpose:

Answer 1

The Terrorism Risk Insurance Act (TRIA) was established by the U.S. government in response to the significant financial losses from the September 11, 2001 terrorist attacks. Its primary goal is to ensure that commercial property and liability insurance covering acts of terrorism remains available and affordable.

Question 2

Key Details of TRIA

Answer 2

Initially enacted in 2002, it guarantees insurers access to federal backing when covering losses resulting from certified acts of terrorism.

The TRIA was initially passed on November 26, 2002, as a means to stabilize the insurance market following the financial uncertainty after 9/11.

It creates a federal backstop (financial support), reimbursing insurance companies for covered terrorism losses that exceed certain thresholds, deductibles, and retention amounts.

Question 3

Requirements for Coverage:

Answer 3

For a terrorist act to be covered under TRIA, it must meet certain criteria:

Be violent or dangerous to human life, property, or infrastructure.

Occur within the United States, on U.S. aircraft, vessels flying the U.S. flag, or U.S.-registered vessels.

Be committed by individuals or groups aiming to coerce or influence the U.S. government or population.

It must be certified as an act of terrorism by:
The Secretary of Treasury,
The Secretary of Homeland Security,
The U.S. Attorney General.

Question 4

TRIA Recent Updates:

Answer 4

TRIA has been renewed multiple times, most recently through the Terrorism Risk Insurance Program Reauthorization Act of 2019, extending TRIA coverage through December 31, 2027.

In summary, TRIA provides crucial financial protection for insurers, enabling them to offer terrorism coverage that might otherwise be unavailable or prohibitively expensive, ensuring stability in insurance markets and economic security.