Following the 9/11 attacks, insurers introduced broad terrorism exclusions, prompting the U.S. government to establish the Terrorism Risk Insurance Act (TRIA) in 2002. This created a temporary federal backstop requiring insurers to offer limited terrorism coverage for certified events.
Transcript
Peter Bransden: In the aftermath of unprecedented losses from 9/11, property and casualty insurers imposed broad exclusions against future terrorist attacks. To avoid a prolonged crisis of coverage, in 2002 the U.S. government implemented the Terrorism Risk Insurance Act (TRIA), creating a temporary Terrorism Risk Insurance Program (TRIP).
Under this law, insurers are required to offer limited protection against acts of terrorism that are certified as such by the U.S. Secretary of State and Attorney General. Despite several attacks within the U.S. since the creation of TRIA, none have achieved certified status.
Organizations should therefore be aware that when accepting TRIA-only coverage embedded within a property or casualty policy, they still remain exposed to potentially catastrophic loss. To address this vulnerability, a terrorism insurance policy can be purchased in the specialty marketplace. This standalone coverage responds regardless of governmental certification and can be tailored to represent an organization’s true exposure to the peril.
