The renewal of the Terrorism Risk Insurance Act (TRIA) will provide a measure of stability going forward in the commercial lines market, according to the rating service Standard & Poor’s. As a result of the renewal and the fact that only minimal changes were made to the program, “we anticipate making no ratings changes at this time for the companies we rate,” according to S&P analyst Amy Friedman.

The backstop was extended for seven years, and domestic acts of terrorism are now included in its scope. Other than those two elements, the backstop remains mostly unchanged from the 2005 renewal. Neither coverage for group life nor the make-available requirement for coverage for nuclear, biological, chemical, or radiological (NBCR) events, which were in the House's original bill, was included in the final version, although the bill includes a mandate that the Government Accountability Office (GAO) conduct a study of the issue. In addition, the aggregate industry loss trigger remains at $100 million. Smaller insurers and reinsurers had wanted to see the trigger pared back to $50 million, where it was in 2006.

Passage of TRIA Renewal Keeps C/L Outlook Stable (Insurance Journal 1/8/08)

January 22, 2008