Terrorism Risk Insurance Act (TRIA)

Terrorism Risk Insurance Act

The NAIC is committed to working with Congress, the Administration, state officials, and the industry to develop a long-term plan to make terrorism insurance available and affordable. President George W. Bush signed the Terrorism Risk Insurance Program Reauthorization Act of 2007 (the Act) December 26, 2007.

Several provisions of the initial Act have changed in the 2007 extension. Some of the more significant changes include:

  • Revising the definition of a certified act of terrorism to eliminate the requirement that the individual(s) are acting on behalf of any foreign person or foreign interest.
  • Extending the program by seven years through December 31, 2014.
  • Requiring clear and conspicuous notice to policyholders of the existence of the $100 billion cap.
  • Fixing the Insurer Deductible at 20% of an insurer’s direct earned premium, and the federal share of compensation at 85% of insured losses that exceed insurer deductibles.
  • Fixing the program trigger at $100 million for all additional program years.
  • Requiring the U.S. Treasury to promulgate regulations for determining pro-rata shares of insured losses under the program when insured losses exceed $100 billion.
  • Requiring the Comptroller General to study the availability and affordability of insurance coverage for losses caused by terrorist attacks involving nuclear, biological, chemical, or radiological materials and issue a report not later than one year after the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007.
  • Requiring the Comptroller General to determine whether there are specific markets in the United States where there are unique capacity constraints on the amount of terrorism insurance available and issue a report not later than 180 days after the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007.
  • Requiring the President’s Working Group on Financial Markets to continue an ongoing study of the long-term availability and affordability of terrorism risk insurance.
  • Accelerating the timing of the mandatory recoupment of the federal share through policyholders surcharges.

In the absence of private market innovations and solutions, sustaining a viable private market for terrorism insurance depends on a federal backstop. The NAIC and state insurance commissioners play an essential role administering the terrorism risk insurance program—issuing timely guidance to insurers and consulting with the U.S. Department of the Treasury and its Terrorism Risk Insurance Program Office.

The NAIC has played an active role in fostering the program and providing assistance to insurers and the federal government as the program is implemented. The NAIC and its members have also testified before both houses of Congress on the need to extend the program.

The NAIC’s Property and Casualty Insurance Committee and its Terrorism Insurance Implementation Working Group (TIIWG) recently adopted a model bulletin, including an expedited filing form intended to help state insurance regulators advise insurers about regulatory requirements related to providing terrorism insurance under the revised program. The model bulletin provides guidance to insurers related to rate filings and policy language that state regulators would find acceptable to protect U.S. businesses from acts of terrorism. The model bulletin describes important changes that are contained in the Act and informs insurers regarding whether rate and policy form filings might be needed.

On December 19, 2007, the Property and Casualty Insurance Committee and the Terrorism Insurance Implementation Working Group adopted the Model Disclosure Forms [Form 1] [Form 2]. Insurers use the forms as drafted, they may modify the forms to meet individual circumstances or use forms that are substantially similar. The U.S. Department of the Treasury worked with the Committee and the Working Group to assure that the disclosures satisfy the revised disclosure requirements in the Act.

The U.S. Department of the Treasury also implements the Terrorism Risk Insurance Program. Their web site provides updated information on the Program, including announcements of all rulemakings, interpretive guidance, and requests for public comments. A link to these can be found at http://www.treasury.gov/resource-center/fin-mkts/Pages/program.aspx.

Committees Active on This Topic

Terrorism Insurance Implementation (C) Working Group

Active Documents
Terrorism Risk Insurance Act (TRIA) Resolution
Adopted 8/26/13 by the Government Relations Leadership Council

On Dec. 14, 2009, two final rules developed by the Terrorism Risk Insurance Program were published in the Federal Register. They are attached for your information.

The first rule deals with the recoupment provisions contained in the Terrorism Risk Insurance Program Reauthorization Act of 2007. The rule describes how the Treasury will calculate the amounts to be recouped from insurers and establishes procedures for insurers to use in collecting Federal Terrorism Policy Surcharges and remitting them to the Treasury. Refer to pages 66051 through 66061.

The second rule addresses various issues related to the $100 billion cap on annual liability contained in the Reauthorization Act. The rule describes how the Treasury intends to determine the pro rata share of insurance losses under the Terrorism Risk Insurance Program when the losses otherwise would exceed the annual monetary cap. Clearly a major loss or series of losses that exceed $100 billion in a given calendar year would produce no winners. The rule describes how the Treasury would impose a claims settlement method that would be least disruptive and most fair under the circumstances. Refer to pages 66061 through 66068. The NAIC Terrorism Risk Implementation Working Group participated in conference calls with the Terrorism Risk Insurance Program Office staff in the early stages of the drafting process. The working group did not submit formal written comments on either rule.

TRIA Extension Model Bulletin
TRIA EXPEDITED TRANSMITTAL DOCUMENT
Model Disclosure Forms [Form 1] [Form 2]
NAIC Comments to Department of Treasury
State TRIA Bulletins
Legislative Information
Congressional Testimony
Testimony Before the Senate Committee on Banking, Housing and Urban Affairs regarding Extension of a Terrorism Risk Insurance Program
(02/28/07 Michael McRaith)
Testimony Before the Committee on Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises regarding Extension of a Terrorism Risk Insurance Program
(03/05/07 Eric Dinallo)
News Releases

NAIC Commends Passage of Terrorism Risk Insurance Legislation
12/18/07

NAIC Commends Senate Action on Terrorism Risk Insurance Legislation
11/16/07
NAIC Applauds House Subcommittees for Terrorism Insurance Hearing
9/27/06
Contacts
Media queries should be directed to the NAIC Communications Division at 816-783-8909 or news@naic.org.

Eric C. Nordman
Director Regulatory Services Division
Phone: 816-783-8232
Fax: 816-460-7594