Terrorism Insurance: Implementation of the Terrorism Risk Insurance Act of 2002
Highlights
After the terrorist attacks of September 11, 2001, insurance coverage for terrorism largely disappeared. Congress passed the Terrorism Risk Insurance Act (TRIA) in 2002 to help commercial property-casualty policyholders obtain terrorism insurance and give the insurance industry time to develop mechanisms to provide such insurance after the act expires on December 31, 2005. Under TRIA, the Department of Treasury caps insurer liability and would process claims and reimburse insurers for a large share of losses from terrorist acts that Treasury certified as meeting certain criteria. As Treasury and industry participants have operated under TRIA for more than a year, GAO was asked to describe (1) their progress in implementing the act and (2) changes in the terrorism insurance market under TRIA.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Treasury | As part of the response to Treasury's TRIA-mandated study requiring an assessment of the effectiveness of TRIA and evaluating the capacity of the industry to offer terrorism insurance after TRIA expires, the Secretary of the Treasury, after consulting with the insurance industry and other interested parties, should also identify for Congress an array of alternatives that may exist for expanding the availability and affordability of terrorism insurance after TRIA expires. These alternatives could assist Congress during its deliberations on how best to ensure the availability and affordability of terrorism insurance after December 2005. |
Closed – Not Implemented
Treasury's June 2005 report did not identify an array of alternatives that may exist for expanding the availability and affordability of terrorism insurance after the Terrorism Risk Insurance Act expires (Congress subsequently extended the federal terrorism insurance program until 2014).
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