Terrorism Risk Insurance Legislation: Issue Summary and Side-by-Side Analysis [November 14, 2014]   [open pdf - 266KB]

"Prior to the September 11, 2001, terrorist attacks, insurance covering terrorism losses was normally included in general insurance policies without additional cost to the policyholders. Following the attacks, this ceased to be the case as insurers and reinsurers pulled back from offering terrorism coverage. It was feared that a lack of insurance against terrorism loss would have a wider economic impact, particularly because insurance coverage can be a significant factor in lending decisions. Congress responded to the disruption in the insurance market by passing the Terrorism Risk Insurance Act of 2002 (TRIA; P.L. [Public Law] 107-297). TRIA created a temporary program, expiring at the end of 2005, to calm the insurance markets through a government backstop sharing in terrorism losses with the intent that this would give the industry time to gather the data and create the structures and capacity necessary for private insurance to cover terrorism risk. […] Under TRIA, terrorism insurance became widely available and largely affordable, and the insurance industry greatly expanded its financial capacity. There has been, however, little apparent success on developing a longer-term private solution, and fears have persisted about wider economic consequences if insurance were not available. […] The current TRIA program expires at the end of 2014. Although insurance industry capacity has increased since 2002, terrorism is still seen by many as essentially uninsurable. Without TRIA, the insurance industry has indicated that terrorism insurance will again become unavailable or unaffordable and fears are again being expressed that lack of terrorism insurance may slow down other sectors of the economy. Several bills (H.R. 508, H.R. 1945, H.R. 2146, S. 2244, and H.R. 4871) have been introduced to extend TRIA and change different aspects of the program. This reports briefly outlines the issues involved with terrorism insurance, summarizes the extension legislation, and includes a side-by-side of the current TRIA law and the bills that have been passed by the Senate (S. 2244) and reported by the House Committee on Financial Services (H.R. 4871)."

Report Number:
CRS Report for Congress, R43619
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