Marsh provides updates on terrorism risk insurance, trends, and capacity through our Marketwatch reports. In addition, Marsh has been monitoring changes to the Terrorism Risk Insurance Act (TRIA) since it was originally signed into law in November 2002 (and extended in 2005 and again in 2007).

Our latest issue, Marketwatch: Terrorism Insurance 2009 — The Standalone Terrorism Market details the conditions, trends, and capacity of the standalone terrorism insurance market as of the first quarter 2009.

This white paper discusses:

• the current environment, which remains competitive and where capacity remains stable;
• how the change in definition of “certified” acts of terrorism in the Terrorism Risk Insurance Act (TRIA) affects the standalone insurance market; and
• notable terrorism products and offerings, including new Bowring Marsh facility and NBCR products.

Background on TRIA

On December 18, 2007, Congress approved the extension of the Terrorism Risk Insurance Act (TRIA) and sent the bill to the President for his signature. It was signed by President Bush on December 26, 2007.

The Terrorism Risk Specialty, a division of the Property and Multinational Practice, has created a document that outlines the new extension and discusses the changes. Highlights of the extension are:

• 7-year term
• Elimination of the distinction between acts of foreign and domestic terrorism
• $100 million trigger (same as expiring version of the Act)
• 20% insurer retentions (same as expiring)
• 15% insurer quota share retention excess of retention (same as expiring)
• Acceleration of recoupment in the event of a loss and elimination of the 3% maximum per year on the amount of the recoupment. In the event of a loss, policyholder surcharges could be significant depending on amount of loss the period of recovery.

New Report and Guidance Now Available

The Department of the Treasury has issued interim guidance on the new TRIA extension that was signed into law on Dec. 26, 2007. In addition to extending the program for seven years, the extension law also eliminated the distinction between "foreign" and "domestic" acts of terrorism, and modified the program's $100 billion liability cap and the associated insurer disclosures related to that cap.

While this guidance is being provided primarily for the benefit of the insurers, it can be quite useful insureds as well. Essentially, this document provides instructions to insurers now that they are required to offer an expanded version of terrorism coverage. It is useful in understanding TRIA and its changes.

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