TRIA Non-Renewal: Your Next Steps - Insurance Thought Leadership

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December 19, 2014

TRIA Non-Renewal: Your Next Steps

Summary:

Solutions may include asking insurers if they will not invoke sunset clauses or conditional exclusions, and provide stop-gap coverage.

Photo Courtesy of Adam Fagen

Two days after Congress adjourned for the year without reauthorizing the Terrorism Risk Insurance Program Reauthorization Act of 2014 (TRIPRA), many organizations are working to understand the impact on their insurance programs when the federal insurance backstop expires on Dec. 31, 2014.

Most experts had expected Congress to reauthorize the law in some form. The failure to do so has implications for insureds with TRIPRA terrorism coverage in most any line, with particular concerns for property, primary and excess liability, workers’ compensation and captive programs.

Organizations that purchased terrorism coverage as part of their insurance programs (and not as a standalone program) may be affected. Potential solutions will depend on individual programs and needs but may include:

  1. Re-approaching insurers to see if they will not invoke sunset clauses or conditional terrorism exclusions, and provide stop-gap coverage until either Congress renews TRIPRA or the policy expires.
  2. Looking to the global standalone terrorism insurance markets for stop-gap coverage. The standalone market has large but limited capacity — it will not be able to fill all requests.
  3. Canceling and rewriting insurance programs with new markets that are able to offer terrorism limits (without sunsets).
  4. Seeking agreement from markets without sunsets to assume terrorism risk from sun-setting markets on the same risks.

It must be noted that these options may come with additional premium charges. Also, organizations should explore any loan, lease or other contracts or covenants that may require them to purchase terrorism coverage.

Congress is set to reconvene on Jan. 6, 2015. It is unclear how congressional leadership will deal with the issue, although some have already been quoted in the media as saying TRIPRA will be a top priority for the new Congress. Among the possible scenarios are:

  1. Immediately after reconvening, Congress could pass a short-term reauthorization to allow the new Congress to formulate a long-term reauthorization bill, which could be materially different than the 2014 version.
  2. Alternatively, both the House and Senate could immediately reintroduce new legislation mirroring the 2014 bill and pass it on an expedited basis.

For more information from the Marsh TRIPRA Update Center, click here. 

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About the Author

Duncan Ellis is a managing director resident in Marsh’s New York office and is the leader of the U.S. property practice. Ellis oversees approximately 250 brokers handling in excess of 3,500 clients and $3 billion in premium. He is also directly involved in many of the country’s larger global risk management clients, as well as many of the smaller middle market accounts.

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