Reauthorization of the Terrorism Risk Insurance Act


U.S. President Barack Obama signed into law a reauthorization of the Terrorism Risk Insurance Act (TRIA) late Monday January, 12 2015. The reauthorization is good for 6 years. The House of Representatives and US Senate passed the act on January 7-8, after the Senate failed to vote on the bill prior to adjourning in late December 2014. This left the Federal backstop to expire on December 31, 2014.

How does this impact the Insurance Market?
  • Increases the total loss amount required for TRIA to trigger from $100 million to $200 million, with increased increments of $20 million per year beginning in 2016.
  • Raises the Federal government's mandatory recoupment from $27.5 billion to $37.5 billion, at a rate of $2 billion each year beginning in 2016.
  • Raises the private industry recoupment total for all events to 140% for covered losses. Previously it was 133%.

While the expiration of TRIA on December 31, 2014 expiration was surprising, many insurers avoided any knee-jerk reactions showing patience and confidence that the new Congress would move swiftly. Insurance markets had been preparing for the changes contemplated in the previously proposed legislation such as an increased financial trigger for government reimbursement and higher carrier retentions. Market capacity and pricing should remain stable now that the bill has been passed and signed into law.

If you have any specific questions, please contact your RCM&D representative.