The long-term viability of the U.S. property terrorism insurance market is back in the spotlight as Congress looks at renewing the federal reinsurance backstop, the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), which is set to expire in Dec. 31, 2020.Life & Health
Global insurance broker Marsh’s 2019 Terrorism Risk Insurance Report concludes that the property terrorism insurance market remains strong with sufficient capacity to respond to today’s main terrorist threats in part due to TRIPRA.
It also matters that there have not been many claims.
According to the report, although there have been no certified terrorism losses in the U.S. since the original federal terrorism reinsurance program (TRIA) was passed following the Sept. 11, 2001 attacks, this federal program and similar programs in other countries are still “crucial to the continued health and stability of the property terrorism insurance market.”
Marsh analysts suggest that if it appears Congress will not renew TRIPRA before it expires, there could be various market effects. Some insurers may insert sunset clauses in renewal policies while others may increase prices or limit their writings, perhaps to preferred locations. Some insurers will have to purchase additional private reinsurance and the influx of new buyers simultaneously into the reinsurance market could affect pricing. Reinsurers are also likely be selective in providing additional capital, which could pose a capacity problem for some businesses in high profile cities and employers with significant workers’ compensation accumulations, according to the report.