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Pool Members Covered Despite TRIA Expiration

Efforts by Congress to reauthorize and extend the Terrorism Risk Insurance Act (TRIA) fell apart after Sen. Tom Coburn (R-Okla.), who is retiring when the new Congress takes office early in 2015, held up the legislation. Without a renewal being passed, the program expired Dec. 31, 2014.

In 2002, Congress passed the TRIA in response to the terrorist attacks of September 11, 2001. This law created a reinsurance facility called the Federal Terrorism Insurance Program as a backstop for insurance claims related to acts of terrorism.
The TRIA was originally intended only as a temporary measure to allow time for the insurance industry to develop their own solutions and products to insure against acts of terrorism. In 2007, the TRIA was extended and broadened to include domestic acts of terrorism, with the updated act called the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA).

Without a reauthorization of these protections, insurers have the right to cancel terrorism policies after Jan. 1, 2015, according to a report in the December 9 issue of Bloomberg Businessweek by Howard Kunreuther and Erwann Michel-Kerjan. The authors, who wrote a paper on the law’s impact for the Wharton Risk Center, stated that insurers are likely to cancel such policies out of fear of insolvency should a massive terrorist attack take place with no government backup in place.

Pool members can rest assured knowing that they’re still covered despite the failure of Congress to extend these acts. Because the CSD Pool takes terrorism risk very seriously, we took the proactive step of purchasing standalone Terrorism coverage for Liability and Property damage under a separate coverage form that in fact surpasses the lapsed protections offered under the TRIA.

When the TRIA protections were still in effect, virtually every standard insurance carrier offered policies that included domestic terrorism sources, but the terms were such that most losses would often go uncovered. In contrast, the Pool offers much broader Terrorism coverage.

Our terrorism coverage is extended to applicable members at no additional cost. The Pool’s Terrorism coverage does not require an act of terrorism to be “certified” for coverage to kick in. Instead it covers “All Acts of Terrorism,” including sabotage. See your Coverage Document for specific terms and conditions.

Background:

The Pool’s Terrorism coverage program has three components: Certified Acts of Terrorism, Other Acts of Terrorism, and Third Party Terrorism Liability.

The terrorist attacks that occurred on September 11, 2001 are considered a “Certified Act of Terrorism,” since they were proclaimed so by designated federal authorities.

The Oklahoma City bombing, which was committed by a US citizen without foreign affiliation, is considered an “Other Act of Terrorism.”

Finally, the 1993 bombing of the World Trade Center would be considered an example of a “Third Party Act of Terrorism Liability” because suits were filed against the Port Authority of New York and New Jersey on behalf of injured parties for injuries, death or property damage claiming the Port Authority was negligent in not preventing the attack.

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