The Terrorism Risk Insurance Act (TRIA) is at risk of expiring at the end of the year. Unless Congress takes action before December 31st, insurers will be without government financial support to pay large scale terrorist attack claims for the first time since the programs inception in 2002.

Both chambers have introduced bills to renew the program, and those bills appear to have bipartisan support. However, Congress is not scheduled to return from recess until mid-November, and it remains uncertain whether the renewal will be completed in time. Additionally, some lawmakers have proposed a shorter renewal period of six to nine months, rather than the previous seven-year authorization that was signed into law in 2007.

Impact on Clients

Without the government backstop, the availability, pricing and quality of Terrorism coverage offered will change. It is important that you are proactive in making your clients aware of the potential changes before they occur. Clients should expect to receive disclosure notices that typically address four areas:

• Premium Attribution – details the portion of the premium that is attributed to terrorism coverage
• Federal Participation – explains how the federal government participates in insured terrorism losses
• Insurer Participation Caps – outlines the caps on insurer participation in terrorism losses
• Possibility of Additional or Return Premium – warns that premium for terrorism coverage is based in part on federal participation and may change

Recommended Actions

To ensure your clients are well-prepared, consider the following steps:

• Ensure client awareness of potential changes to terrorism coverage
• Review disclosure notices carefully when received
• Contact your broker about standalone terrorism coverage quotes as a backup option

For more information, contact Rick Cline at rick@allaccessins.com or call (303) 932-1700.