Two days after Congress adjourned for the year without reauthorizing the Terrorism Risk Insurance Program Reauthorization Act of 2014 (TRIPRA), many organizations are working to understand the impact on their insurance programs when the federal insurance backstop expires on Dec. 31, 2014.
Most experts had expected Congress to reauthorize the law in some form. The failure to do so has implications for insureds with TRIPRA terrorism coverage in most any line, with particular concerns for property, primary and excess liability, workers’ compensation and captive programs.
Organizations that purchased terrorism coverage as part of their insurance programs (and not as a standalone program) may be affected. Potential solutions will depend on individual programs and needs but may include:
- Re-approaching insurers to see if they will not invoke sunset clauses or conditional terrorism exclusions, and provide stop-gap coverage until either Congress renews TRIPRA or the policy expires.
- Looking to the global standalone terrorism insurance markets for stop-gap coverage. The standalone market has large but limited capacity -- it will not be able to fill all requests.
- Canceling and rewriting insurance programs with new markets that are able to offer terrorism limits (without sunsets).
- Seeking agreement from markets without sunsets to assume terrorism risk from sun-setting markets on the same risks.
- Immediately after reconvening, Congress could pass a short-term reauthorization to allow the new Congress to formulate a long-term reauthorization bill, which could be materially different than the 2014 version.
- Alternatively, both the House and Senate could immediately reintroduce new legislation mirroring the 2014 bill and pass it on an expedited basis.
