On December 20, 2019, after weeks of negotiations and debate, President Donald Trump signed into law omnibus legislation funding the government through next fall. Tucked away in the voluminous bill was four short paragraphs reauthorizing the Terrorism Risk Insurance Program for seven years. The Program, colloquially known as TRIA, is the cornerstone that allows the property/casualty industry to provide terrorism risk coverage in the post-9/11 market. While the language that provides for the lengthy reauthorization may be short, it was the result of a sustained campaign by Zurich and others industry stakeholders over the past few years to ensure the program was reauthorized in a timely fashion and remained intact in its current form.
The availability and affordability of terrorism risk insurance remains a high priority in the US market. In a 2019 report, broker Marsh stated that the US is the largest buyer of terrorism risk insurance, with a take-up rate for TRIA coverage embedded in US property policies of 62%. By reauthorizing the program for seven years, Congress provided stability and certainty to the US market. In 2015, the program lapsed for 11 days after Congress failed to reach agreement on a reauthorization bill, making this recent legislative victory all the more welcome.
Congress also took the opportunity to include in the legislation a requirement for the federal government to produce two new studies, reflecting the evolving risk profile of terrorism in the US. First, the US Treasury will complete a study on the marketplace for terrorism risk insurance for houses of worship. This provision was a top priority for many lawmakers who are concerned about the availability and affordability for these entities in the wake of recent shootings at synagogues and churches. Separately, the Government Accountability Office will analyze the impact of the risks associated with cyber terrorism and provide recommendations to address any gaps in the current system. This is not the first time that cyber terrorism has been raised as an area for additional clarity, with US Treasury providing additional guidance in 2016 that “to the extent cyber insurance is written under a policy that is within the definition of property and casualty insurance under TRIA the provisions of TRIA will apply to such policies”. Zurich applauds the inclusion of these studies and advocated for this approach as an appropriate and reasonable option to address new and developing market dynamics.