January 8, 2015
Under a sunset provision, the Terrorism Risk Insurance Act (TRIA) expired on December 31, 2014. TRIA provided a mechanism to share insured losses resulting from terrorism between the public (insureds and insurance carriers) and the government. Many expect Congress will pass an extension of the law this month. On January 7, the House of Representatives approved a bill to extend the law through 2020. Segal Select Insurance Services, Inc. has contacted insurance carriers to ask what that they intend to do in the interim. Most indicated they intend to take a “wait and see” approach. That means existing policies will remain unchanged.
For renewals and new business, the options are to quote without any terrorism exclusion or with limited coverage. The most likely limited coverage options will be either a lower limit of liability (a “sub-limit) or an exclusion for certain types of events, such as nuclear, biological, chemical and radiological, or both. For renewals and new business, additional premiums may be involved for whatever scope of terrorism coverage is provided. Some carriers are offering stand-alone terrorism insurance. However, capacity is limited, the scope of coverage may be limited, and the premium is likely to be significant, especially for any insured located in a major, urban area. Sponsors of plans that own or lease property may want to consider (depending on the location and value of the property) whether a stand-alone policy is available and economical.
Segal Select will continue to monitor this issue and will report any developments. If you have any questions, please contact Chief Operating Officer Brian Smith at 212.251.5333.
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