We live in a world where terrorism unfortunately poses genuine insurance risks. The Terrorism Risk Insurance Act (TRIA) was passed by President George W. Bush on November 26, 2002 to establish a backstop for insurance claims arising from acts of terrorism. This coverage includes workers’ compensation claims. Before September 11, 2001, insurance companies generally did not charge for nor specifically exclude terrorism coverage. However, much of the cost from the 9/11 attacks fell on reinsurance companies, leading some to withdraw coverage for terrorism from the market place.
TRIA was passed to provide protection for employers and insurers in the event of acts of terrorism. It creates something like a federal reinsurance program in cases of terrorism. In exchange for this protection, the insurance industry must offer terrorism coverage and cover a certain amount of losses before federal assistance kicks in. The law has been extended several times since 2002, but regrettably, Congress let it lapse on December 31, 2014.
With a new Congress convening this week, employers and insurers are hopeful that TRIA will be renewed shortly. Without TRIA protection, businesses and insurers could be left without adequate insurance in the event of a terrorist attack. The risks are probably greatest in urban areas, particularly in large American cities. Congress is playing with fire in allowing TRIA to lapse.
Employers and practitioners should be aware of the importance of TRIA in workers’ compensation and should consider contacting their Congressional representatives to urge the renewal of TRIA as soon as possible.
