US act of 2002 establishing a federal backstop mechanism for terrorist losses exceeding the private insurance market's capacity.
The Terrorism Risk Insurance Act (TRIA) is a US federal law enacted in November 2002 in response to the mass withdrawal of terrorism coverage by private insurers following the September 11, 2001 attacks. The mechanism rests on loss-sharing between the private sector and the federal government. Insurers must offer terrorism coverage and bear an initial deductible calculated as a percentage of their prior-year commercial insurance premiums. Beyond this deductible, the federal government reimburses 80 percent of losses up to an annual aggregate cap of 100 billion dollars. Insurance companies then reimburse the government through a post-loss surcharge on premiums, on terms determined by Congress. TRIA has been renewed and amended several times, most recently through 2027. It covers attacks certified as acts of terrorism by the Secretary of the Treasury, the Secretary of State and the Attorney General. In the debate on the insurability of systemic cyber risk, TRIA is regularly cited as a reference model for a potential federal cyber backstop mechanism, given the parallels between the impossibility of diversifying terrorism risk and the impossibility of diversifying accumulation cyber risk.
At post-2001 reinsurance program renewals, US insurers found their reinsurers withdrawing terrorism coverage or drastically limiting it. Without TRIA, the US commercial property insurance market would have been left without coverage for targets such as skyscrapers, shopping centers or airports. The mechanism made these risks insurable again by capping the private sector's maximum exposure.
Terrorism Risk Insurance Act, TRIA, programme fédéral terrorisme USA