Terrorism Risk Insurance Program Reauthorization Act of 2015
On 12 January 2015, President Obama signed the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA/TRIA) (H.R.26) into law, thereby extending the TRIA Program for an additional six years. The reauthorisation introduces few or no changes of direct consequence to the Lloyd’s Market in 2015.
Scope of TRIPRA/TRIA 2015
The major changes to the program are:
Duration: 6 year reauthorization.
Program Trigger: Remains at $100m in 2015 and then incrementally increases by $20m each year to reach $200m in 2020.
Insurer Co-Share: Remains at 15% in 2015 and then incrementally increases by one percentage point per year to reach 20% in 2020.
Recoupment: The insurance marketplace aggregate retention amount, currently $27.5 billion, will increase over the first five years in annual $2 billion increments to $37.5 billion. In the sixth year, the aggregate retention shall be equal to a three year average of the sum of insurer deductibles for all insurers participating in the program. The percentage recoupment increases to 140% from 133%.
Certification: The Treasury Secretary will become the sole decision-maker on the certification of a terrorist event. In addition, the certification process will be reviewed, resulting in the promulgation of regulations establishing a timeline for certification.
Notice: Removes the requirement that TRIA Notice be given at the time of purchase (please note, however, that notice still must be given at time of offer and renewal).
Other Terms: All other major terms of the TRIA program remain unchanged from the current law.
(Please refer to updated guidance on Crystal for the full details of the TRIPRA program)
Terrorism coverage during the ‘lapse period’
Lloyd’s anticipates that the Federal Insurance Office (FIO) will issue guidance clarifying whether insurers have an obligation to “make available” terrorism coverage for policies which incepted during the lapse period or previously contained TRIA coverage which was excluded by contract at TRIA’s sunset. Such guidance will be communicated promptly to the market when released.
For any related enquiries please contact Lloyd’s International Trading Advice (LITA).
Lloyd's International Trading Advice
Primary point of contact for advice and information on Lloyd's trading status worldwide.