Terrorism Insurance

Following the terrorist attacks of September 11, 2001, insurers backed out of the terrorism insurance market place prompting Congress to create a federal reinsurance backstop program in the Terrorism Risk Insurance Act (TRIA) of 2002, which also mandated that insurers make terrorism coverage available along with its property and casualty lines. This program was reauthorized in December 2019 to continue the program through 2027.

Advocacy

What is the fundamental issue?

Congress must reauthorize the Terrorism Risk Insurance Act (TRIA) program to ensure access to affordable coverage for commercial property. TRIA is next set to expire at the end of 2027.

I am a real estate professional. What does this mean for my business?

TRIA is a public-private partnership created to fill in a gap in the private insurance market and protect the nation's business sector by making available terrorism risk insurance coverage. If terrorism insurance becomes unavailable, commercial real estate borrowers could be in technical default of financing obligations.

NAR Policy on Terrorism Insurance

NAR supports the continued availability and affordability of terrorism risk insurance coverage under the TRIA program.

Legislative/Regulatory Status/Outlook

The Terrorism Risk Insurance Act (TRIA) program must be reauthorized before Dec. 31, 2027.

On December 17, 2019, the House of Representatives passed H.R. 1865, a year-end spending bill which included provisions to reauthorize TRIA for 7 years (through 2027). On December 19, the Senate did the same. H.R. 1865 makes no changes to the TRIA program other than requiring a GAO study on cyber-terrorism.

Following a brief lapse in Congressional authority in 2015, the program was extended for 6 years (through 2020) with several structural changes. Changes included raising from $100 to $200 million the amount of losses before the federal backstop is "triggered"; decreasing the government's share of the losses above that point from 85% to 80%; and increasing the mandatory recoupment amount from $27.5 to $37.5 billion.

As part of the reauthorization, several government studies were commissioned on terrorism risk insurance. The CBO released a studypdf on the TRIA program, examining its history, how the current program works, its effects on insurance markets, and policy options for the future. The Treasury Department also conducted several studies and reports to Congress that were favorable to the program.