{
  "id": "R42716",
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      "date": "2014-07-23",
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      "title": "Terrorism Risk Insurance: Issue Analysis and Overview of Current Program",
      "summary": "Prior to the September 11, 2001, terrorist attacks, coverage for losses from such attacks was normally included in general insurance policies without specific cost to the policyholders. Following the attacks, such coverage became very expensive if offered at all. Because insurance is required for a variety of transactions, it was feared that the absence of insurance against terrorism loss would have a wider economic impact. Terrorism insurance was largely unavailable for most of 2002, and some have argued that this adversely affected parts of the economy.\nCongress responded to the disruption in the insurance market by passing the Terrorism Risk Insurance Act of 2002 (TRIA; P.L. 107-297). TRIA created a temporary three-year Terrorism Insurance Program in which the government would share some of the losses with private insurers should a foreign terrorist attack occur. This program was extended in 2005 (P.L. 109-144) and 2007 (P.L. 110-160). The amount of government loss sharing depends on the size of the insured loss. In general terms, for a relatively small loss, private industry covers the entire loss. For a medium-sized loss, the federal role is to spread the loss over time and over the entire insurance industry; the government assists insurers initially but then recoups the payments through a broad levy on insurance policies afterwards. For a large loss, the federal government would cover most of the losses, although recoupment is possible in these circumstances as well. Insurers are required to make terrorism coverage available to commercial policyholders, but TRIA does not require policyholders to purchase the coverage. The prospective government share of losses has been reduced over time, but the 2007 reauthorization expanded the program to cover losses from acts of domestic terrorism. The TRIA program is currently slated to expire at the end of 2014.\nThe specifics of the current program are as follows: (1) terrorist act must cause $5 million in insured losses to be certified for TRIA coverage; (2) the aggregate insured losses from a certified act of terrorism must be $100 million in a year for the government coverage to begin; and (3) an individual insurer must meet a deductible of 20% of its annual premiums for the government coverage to begin. Once these thresholds are passed, the government covers 85% of insured losses due to terrorism. If the insured losses are under $27.5 billion, the Secretary of the Treasury is required to recoup 133% of government outlays. As insured losses rise above $27.5 billion, the Secretary is required to recoup a progressively reduced amount of the outlays. At some high insured loss level, which will depend on the exact distribution of losses, the Secretary would no longer be required to recoup outlays, but retains the discretionary authority to do so.\nSince TRIA\u2019s passage, the private industry\u2019s willingness and ability to cover terrorism risk have increased. According to industry surveys, prices for terrorism coverage have generally trended downward, with approximately 60% of commercial policyholders purchasing coverage over the past few years. This relative market calm has been under the umbrella of TRIA coverage, and it is unclear how the insurance market would react to the expiration of the federal program. \nIn the 113th Congress, five bills (H.R. 508, H.R. 1945, H.R. 2146, S. 2244, and H.R. 4871) have been introduced to amend the TRIA statute. S. 2244 passed the Senate on a vote of 93-4 on July 17, 2014. H.R. 4871 was reported by the House Financial Services Committee on July 16, 2014. Both bills would extend the TRIA program, but have a number of differences, particularly the length (seven years for S. 2244 vs. five years for H.R. 4871) and the program trigger (remaining at $100 million in S. 2244 vs. increasing to $500 million for non-Nuclear, Chemical, Biological, or Radiological [NCBR] terrorist events in H.R. 4871).",
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      "id": "R42716_2014Jun04",
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      "retrieved": "2014-07-08T21:53:44",
      "title": "Terrorism Risk Insurance: Issue Analysis and Overview of Current Program",
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          "id": "International affairs",
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      "id": "R42716_2014Mar28",
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      "retrieved": "2014-05-06T21:21:54",
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      "title": "Terrorism Risk Insurance: Issue Analysis and Overview of Current Program",
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      "title": "Terrorism Risk Insurance: Issue Analysis and Overview of Current Program",
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