Webel

Question 1

What was terrorism coverage like before 9/11?

Answer 1

was not separate or excluded

Question 2

How did the private market react after 9/11?

Answer 2

heaviest losses absorbed by reinsurers => they withdrawed (no public data)
regulators approved policy form changes to exclude terrorism cov
but…
coverage is needed in some real estate, construction, energy sector transactions

Question 3

How many times has TRIA been reauthorized?

Answer 3

originally a 3-yr program reauthorized in 2005, 2007, and 2015 (and later in 2019)

Question 4

What are the 3 goals of TRIA?

Answer 4

• Create temporary federal program of shared public/private compensation for terrorism losses to allow private market to stabilize
• Protect consumers by ensuring availability and affordability
• Preserve state regulation of insurance

Question 5

What did the 2007 amendment to TRIA change?

Answer 5

allowed domestic terrorism coverage, not just foreign

Question 6

What lines does TRIA exclude?

Answer 6

only commercial P&C excluding….
o Crop Insurance
o Private mortgage insurance
o Title insurance
o Financial guaranty insurance
o Medical malpractice
o Flood insurance & reinsurance
o Reinsurance
o Commercial Auto
o Theft / burglary
o Surety

Question 7

Who needs to certify an act of terrorism?

Answer 7

-secretary of the treasury
-secretary of homeland security
-attorney general

Question 8

Additional Loss Sharing Criteria

Answer 8

• Losses >= 5m in US or to U.S air carriers / sea vessels
• Aggregate Industry Losses >= 200m
• 20% Annual Direct EP deductible (included lines)
• 80% coverage above the deductible
• 100b aggregate loss cap (no one is required to provide coverage)
• Under 37.5b, required to recoup 140% of losses (before end of 2029), over 37.5b, has discretion to

Question 9

How does TRIA preserve state regulation of insurance?

Answer 9

• Federal law does not limit rates
• Nothing shall affect regulatory authority of the state insurance commissioner

Question 10

What must insurers do in regard to terrorism coverage?

Answer 10

insurers that offer covered lines at least offer terrorism coverage – must reveal premium charged for terrorism insurance and possible federal share of compensation

Question 11

Who administers TRIA?

Answer 11

• Initially done by the Treasury Secretary
• Now, after Dodd-Frank Act (2010), FIO is responsible (contained with Department of Treasury)

Question 12

How is cyberterrorism treated?

Answer 12

not addressed
cyber liability is a new LOB (2016)
DoT clarified that stand-alone CL policies are covered
however, half of CL policies exclude terrorism

Question 13

How do insurers address lack of terrorism data?

Answer 13

terrorism models are used

Question 14

Is terrorism an insurable risk?

Answer 14

• Large number of exposures => predict losses (FAIL)
• Definite and measurable losses (PASS)
• Fortuitous / accidental (FAIL)
• Non-catastrophic losses (Possibly fails or passes based on UW actions of insurers)

Question 15

Briefly list some examples of prior uninsurable risk in the U.S

Answer 15

-Government “war damage” program during WWII
-NFIP
-Housing and Urban Development Act of 1968
o Similar to commercial excess reinsurance
o Private reinsurers eventually returned to market
o Federal riot program terminated in 1985

Question 16

How is terrorism treated by other countries?

Answer 16

• Spain – government – owned reinsurer
• UK – Pool Re – private mutual insurance company
• Germany – government backing to private industry
• Canada – rejected creating a program post 9/11