Is Your Business Insured Against Terrorism?

Is Your Business Insured Against Terrorism?

picjumbo.com_IMG_7453There isn’t a time in memory when businesses haven’t been touched by the legal and financial implications of war. We’ve worked with and hired veterans who possess extraordinary commitment and skill. Our employees have been sent to war, and we’ve navigated the laws regarding their continued employment. We dutifully pay our taxes, knowing some of the funds will be used to finance the military. But, until the domestic terrorist attacks of September 11, 2001, we never had to consider war, or more specifically, terrorism, when choosing our business property insurance coverage. Until then, insurance companies hadn’t given it much thought either.

The History of TRIA

The aftermath of the attacks on September 11, 2001 changed that, and not for the better. Prior to 9/11, acts of terrorism weren’t specifically included or excluded by most insurance companies. After 9/11, reinsurers had no way to accurately gauge the risk of terrorism exposure, so they changed their coverage to specifically exclude acts of terror. Since reinsurers were no longer covering it, primary insurers excluded terror from coverage as well. State regulators approved such exclusions in most cases.

Since damages resulting from terrorist attacks were no longer covered, many business sectors became vulnerable, including construction, energy, transportation, real estate, and utilities. In 2002, to sidestep any potential threat that vulnerability could bring to the national economy, Congress enacted TRIA, or the Terrorism Risk Insurance Act.

What is TRIA?

TRIA requires primary insurers to offer terrorism coverage for specific types of insurance. To help offset the risk taken on by the primary insurers, the federal government will fill the role of reinsurer, serving as a backstop in the event of a terrorist attack. Primary insurers will submit claims to the federal government’s Share Claim Process. After reviewing and approving the claims, compensation will be dispersed to the primary insurers by the U.S. Department of Treasury.

The Federal Terrorism Insurance Program was established to handle administrative duties related to helping the post-9/11 insurance market recover, as well as to facilitate recovery after any future terrorist attacks. Overseeing the Federal Terrorism Insurance Program are the Secretary of the Treasury and the Federal Insurance Office.

The Future of TRIA

Each time TRIA is set to be considered for extension, anxiety arises from impacted sectors that are concerned about the possibility of canceled or unfunded projects. So, given the importance of TRIA, it’s clear that it will exist in some version for the foreseeable future. Recent history shows that to be true, too. In 2007, TRIA was amended and extended by Congress. In January, 2015, President Obama signed a six year extension of TRIA, staving off new concerns that commercial loans and projects could be halted if TRIA were to lapse.


Among other things, the Terrorism Risk Insurance Act (TRIA) requires insurers to offer certain types of coverage for acts of terrorism. But, the Act doesn’t make the insurers go it alone. Instead, TRIA assigns the federal government the role of reinsurer in the event of a terrorist attack. TRIA is the law, and insurers are obliged to abide by it. Click here for more information about TRIA, and click here for more information about the Federal Share Claim Process.