President Expected to Sign TRIA Legislation
December 19, 2005
Over the weekend, the Senate and House approved a compromise bill that extends the federal terrorism risk insurance program for two years through December, 31, 2007. The President is expected to sign the bill before year end.
The final bill includes:
- “Certification” for acts of terrorism will remain at $5 million and will keep
the “make available” provision for terrorist events greater than $5 million;
- An increase in the amount of insured losses that would trigger the federal backstop,
from $5 million under current law to $50 million in 2006 and to $100 million in 2007 in
order to shift insurance coverage for smaller terrorist incidents to the private sector;
- An increase in the deductibles on all lines of insurance from their current level of
15 percent, to 17.5 percent in 2006 and 20 percent in 2007;
- After the insurance deductible level has been reached, the federal government has a 90
percent coshare of additional insurance losses in 2006 and an 85 percent coshare of insurance
losses in 2007;
- Insurance lines that are no longer covered include: commercial automotive, burglary and
theft, surety, professional liability insurance, and farm owners multiple peril; and
- A Presidential Working Group on Financial Markets shall perform an analysis regarding the long-term availability and affordability of insurance for terrorism risk that includes nuclear, biological, chemical, and radiation risks and life coverage.
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