Terrorism Risk Insurance

10. March, 2015 • 0 Comments

If you purchase aviation insurance, or any type of commercial insurance for that matter, you’ve likely been required to decide whether to accept or decline TRIA coverage, as we commonly refer to it.

Prior to 9/11, many commercial insurers (but not including aviation) provided terrorism coverage at no additional charge. In late 2001, this changed as insurers realized the reality of terrorism exposures with estimated costs of the 9/11 terrorists attacks exceeding $32.5 billion in the aggregate.

The original Terrorism Risk Insurance Act of 2002 (TRIA) was signed into law by President Bush on November 26, 2002. The legislation was implemented to assure the availability of insurance coverage for an act of terrorism by (1) requiring that the insurance companies make this coverage available to commercial insurance buyers, and by (2) providing a backstop to the insurance companies through which the federal government would reimburse the insurance companies for losses exceeding certain levels.

The most recent extension of this law, the Terrorism Risk Insurance Program Reauthorization Act of 2015, was signed into law by President Obama on January 12, 2015. This extension assures that terrorism coverage will continue to be available in the commercial insurance market through 2020. It also incrementally shifts the burden of the exposure away from the federal government to the commercial insurance carriers by (1) increasing the level at which federal participation begins from the current $100,000,000 up to $200,000,000 in aggregate insurance industry covered losses, and by (2) incrementally decreasing the federal government’s share of payments from the current 85% down to 80% by the year 2020.

Since the law’s inception in 2002 most aviation insurers have offered TRIA coverage at each renewal, and many require a signed declination of the coverage before they will issue the policy. As a result, you can expect that we will continue to ask you for acceptance or declination of the coverage option.

If you are like most, you may need a refresher (recurrent training in pilot terms) on exactly what TRIA does for you on your aviation policy. We are always glad to talk with you and we welcome your call at 800.662.4401. If you prefer, you can also link to (www.lljohns.com/) to get a closer look at the coverage and the benefits.

Comments are closed.