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Terrorism Risk Insurance Act Set to Expire After Bill Blocked In Senate
The Terrorism Risk Insurance Act (TRIA) expires on December 31, 2014, after a House-passed bill to extend the program for an additional six years was blocked in the U.S. Senate. TRIA, which was created shortly after the terrorist attacks of September 11, 2001, provided a federal insurance backstop in the event of a major terrorist attack. TRIA’s federal insurance backstop has allowed insurers to sell coverage for terrorist attacks at affordable rates while limiting their overall risk.
TRIA’s reauthorization stalled on December 16, 2014, as the U.S. Senate failed to take up the House’s bill before adjourning for the session allowing TRIA to expire.
Potential Impact of Expiration
Congress reconvenes on January 6, 2015, and the best case scenario is the House and Senate will quickly pass a short-term reauthorization to allow the new Congress to formulate a long-term reauthorization bill, which could be different than the 2014 version or both the House and Senate could immediately reintroduce new legislation mirroring the 2014 bill, and pass it on an expedited basis.
Organizations that have purchased terrorism coverage as part of their overall insurance program may be affected. Of particular concern are situations where organizations have loan covenants that determine the type and amount of terrorism insurance coverage that is required. As of January 1, 2015 they may find themselves in breach of contract.
As each situation is unique, we would encourage you to contact a McGriff, Seibels & Williams representative if you have any questions.
We will provide additional information as the situation unfolds.