While the Terrorism Risk Insurance Act (TRIA) expired at the end of 2014, Congressional efforts to reauthorize TRIA have finally come together. In one of the first Congressional acts of 2015, members of the House of Representatives voted (416-5) in favor of reauthorizing the program, advancing the legislation for consideration in the Senate.
Members of the Senate did not delay, responding only one day later with an overwhelming majority vote (93-4) to reauthorize the program. On January 12, President Barack Obama signed H.R. 26, the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA 2015), into law. It should be noted that the legislative details of H.R. 26 are nearly identical to the amended version of S.2244, which passed the House in December.
This new law extends TRIA through December 31, 2020, and implements some changes over the previous program that was last reauthorized by TRIPRA 2007. Under TRIPRA 2015, the Program trigger will increase from USD 100 million to USD 200 million. The trigger increase with be phased in incrementally each year of the program. Language in TRIPRA 2015 also clarifies that coverage is "triggered" after aggregate insured losses from any "acts" of terrorism reach the applicable threshold in a calendar year-meaning that multiple terror attack losses occurring in a calendar year will contribute toward meeting the trigger threshold.
Another material change implemented through TRIPRA 2015 will reduce the federal loss co-share from 85% to 80%, also phased-in incrementally each year of the program. These changes are not unexpected, as each reauthorization of the program has involved scaling back federal coverage under the backstop in some way. This reduction of federal support aims to push more of the liability onto the private insurance market.
While the uncertain legislative process during 2014 resulted in a temporary expiry of the program, the impact to the insurance industry was minimal as it was expected that Congress would act quickly to reauthorize the federal backstop program in early 2015. With TRIPRA 2015 now enacted into law, the critically important TRIA program will again serve to protect the U.S. insurance industry, and the greater economy, against acts of terrorism for an additional six years.
With recent tragedies involving terrorism in major cities Ottawa, Sydney, and Paris, the need for this federal backstop program continues as the threat of terrorism in the United States remains ever present. The strong bipartisan support to extend the program from both the House and the Senate made it clear that the federal backstop program, TRIA, is necessary to guarantee stability and economic protection from future terrorist attacks against the United States.
To aid in your understanding of all program changes, a comparison of TRIPRA 2015 to TRIPRA 2007 is available here (PDF).