Certification of an act of terrorism (TRIA)

Under the Terrorism Risk Insurance Act of 2002, the word terrorism in a US policy usually points to a certified act. The Treasury Secretary, in consultation with the Secretary of Homeland Security and the Attorney General (since the 2015 reauthorization; the 2002 act required the concurrence of the Secretary of State and the Attorney General), declares that the event is a violent act or an act dangerous to human life, property or infrastructure, committed in the United States or against a US air carrier, vessel or diplomatic mission, to coerce the civilian population or to influence government policy by coercion. Insured losses must exceed $5 million. Until the 2007 law, the perpetrator had to act on behalf of a foreign interest; that condition was dropped. No act has been certified since 2002. The Boston Marathon bombings on April 15, 2013 raised the question without any decision from Treasury, and neither San Bernardino in 2015 nor Orlando in 2016 was certified. The consequence shows in the wording. A policy that covers only certified terrorism leaves an unclassified attack to its other clauses, and the insurer then pays under its terrorism exclusion or under the ordinary terms of the contract. The law sets no deadline for certification, which leaves the insurer unsure which regime its payment falls under. Federal sharing starts only above a program trigger of $200 million and each insurer's deductible, equal to 20% of its prior-year direct earned premium.