On Monday, January 12, President Barack Obama signed into law a reauthorization of the Terrorism Risk Insurance Act (TRIA), first enacted in 2002 following the 9/11 terrorist attacks but which had expired on December 31, 2014. TRIA provides federal reinsurance backstop for insured losses resulting from terrorism, and was essential to preserving the market for terrorism insurance following catastrophic losses sustained by domestic and foreign reinsurers following the 9/11 attacks. Supporters of the TRIA reauthorization view the program as necessary to ensuring the continued availability of terrorism coverage, noting that many policies condition coverage on extension of the federal program.
The first piece of legislation signed into law this year, the reauthorization extends TRIA through the end of 2020 and will incrementally raise the trigger for reinsurance coverage under the program from $100 million to $200 million beginning in 2016, as well as increasing insurers’ co-pays from 15 to 20 percent and raising the federal government’s mandatory recoupment from $27.5 billion to $37.5 billion. The reauthorization also requires additional reporting from the insurance industry beginning in 2016, concerning the market for terrorism coverage, including premiums earned, location of exposures, and the market for private reinsurance for terrorism coverage. Likewise, in 2016 the secretary of the Treasury is required to report to Congress on the overall effectiveness of the program.
In addition to renewing the insurance program, the law provides for the creation of the National Association of Registered Agents and Brokers (NARAB), which will be made up of state insurance commissioners and insurance market representatives. NARAB will streamline the licensing process for registered insurance agents and brokers, which will help insurance agents and brokers operate on a multistate basis.