Ernesto Otero
Professor William R. Feldhaus
RMI 4020 Property & Liability Insurance
09/16/2014

TRIA Extension: A Necessity Do you recall a time of great devastation and catastrophe? Did you own property that was damaged in a terrorist attack? One incident that will define terrorism, is what happened that afternoon September 11, 2001. On September 11, 2001, terrorists attacked the Unites States. They hijacked four airplanes in mid-flight. The terrorists then flew two of the planes into two skyscrapers at the World Trade Center in New York City. Thus, the impact caused the buildings to catch fire and collapse. Shortly after another plane destroyed part of the Pentagon (the U.S. military headquarters) in Arlington, Virginia. Lastly, the fourth plane crashed in Shanks Ville, Pennsylvania3. These terroristic attacks are some of the events that struck U.S citizens, taking lives, destroying families, and leaving more impaired physically and emotionally. Congress passionately passed TRIA (Terrorism Risk Insurance Act) in order to insure and compensate those affected by such devastating terrorism.
DEFINITION OF TRIA:
According to the U.S Department of Treasury TRIA is a law created establishing a temporary federal program that provides for a transparent system of shared public and private compensation for certain insured losses resulting from a certified act of terror, such as the attack on the monumental twin towers. The Claims Procedures Rule, in particular, specifically addresses requirements for Federal payment, the submission of an initial notice of insured loss, loss certifications, the timing and process for payment, associated recordkeeping requirements, as well as Treasury’s audit and investigation authority. It’s evident that Congress supports and ensures U.S citizens affected by terrorism. TRIA gives confidence to the U.S market that despite catastrophe there is a plan to recover under workers compensation. Workers’ compensation insurers are particularly affected by a terrorist attack. By definition, workers’ compensation policies must cover all risks, including terrorism, because workers’ compensation covers all injuries and deaths that are deemed under a state’s law as work-related without distinguishing the source of the injury. This is an important policy affecting the lives of many in times of necessity. TRIA ACTION & REQUIREMENTS:
TRIA was designed to protect the commercial insurance market and its customers by requiring insurers to offer terrorism coverage in exchange for the government stepping in with reimbursement if the industry’s losses exceed $100 million after a single terrorist attack5. That measure remains in the new proposed legislation, as does a 20 percent insurer deductible. U.S Department of Treasury mandates these structures of assistance and defines an eligible insurer is any entity or affiliate that: Is a recipient of direct earned premiums for any type of commercial property and casualty insurance coverage; is licensed (or admitted) to provide insurance in any State, approved for the purpose of offering property and casualty insurance by a Federal agency in connection with maritime, energy, or aviation activity, or is a State residual market insurance entity or State workers’ compensation fund, and meets any other criteria that the Secretary may reasonably prescribe.
WHAT TRIGGERS TRIA, AUDIT AND CONTENT:
Program Trigger: Program is triggered following occurrence of event determined by Secretary of the Treasury, Secretary of Treasury, and the U.S. Attorney General to be act of terrorism. Individual companies have a different trigger (or Deductible), for each individual company is 17.5 percent of premiums. Additionally, Industry-wide Retention sates: The industry as a whole must cover a certain amount of the losses before federal assistance is available. The difference between this amount and the aggregate amount that insurers must pay (deductibles and co-payments) can be recouped from