Property/casualty insurers will bear the cost if changes to the Terrorism Risk Insurance Act (TRIA) of 2002 proposed by the Treasury department become law, a new report says.
The study “Global Risk Alert –TRIA in Jeopardy” by the National Property Brokerage of Aon says the changes will fundamentally alter the program, which was passed in the wake of 9/11 and was temporarily extended by amendment in 2005 and 2007.
The changes Aon cites are a proposal would remove the current coverage for domestic terrorism and revert to TRIA’s previous incarnation that only included acts of perpetrated by foreigners and also revisions that would increase the deductibles and co-insurance levels of insurers over time.
“[TRIA] 2007 was not scheduled to expire until 2014 and the 2007 extension did not contain any substantive changes in the insurance industry's retained exposures under the Act,” says Aaron Davis, managing director with Aon National Property Brokerage. “However, the 2010 Budget Proposal would drastically scale back the TRIA reinsurance fund starting in 2011 and call for TRIA's expiration without renewal by December 2014.”
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