3 Recommendations to Improve TRIA

Eliminate Low Risk Sublines, Fix Policyholder Surcharges, and Follow the Money

I have filed the attached comments on behalf of Centers for Better Insurance in response to Treasury’s Notice appearing at 89 FR 19639 (March 19, 2024) seeking comments in advance of its 2024 Report on the Effectiveness of the Terrorism Risk Insurance Program.

Executive Summary

1. An analysis of the data provided by Treasury in the 2022 TRIP Effectiveness Report suggests that 30% of insurance (as measured by direct earned premium) currently subject to the program could be removed from the program without any impact on the availability or affordability of coverage for terrorism losses. Treasury should identify the sublines in which terrorism coverage is so low risk it is being given away for free and eliminate those sublines from the program.

2. An analysis of the data provided by Treasury in the 2022 TRIP Effectiveness Report suggests that the program is dominated by captive insurance companies to the extreme detriment of small business insureds. Treasury should restructure the recoupment mechanism to more equitably align the benefits of program payouts (up to 90% of which go to large corporate captive owners) with the burdens of the policyholder surcharge (more than 90% of which fall on small and medium businesses, nonprofits, and local governments).

3. According to Treasury’s 2022 TRIP Effectiveness Report, traditional insurers have collected nearly $50 billion dollars in terrorism premium without paying a single dollar in losses under the program. Treasury should investigate the use of these accumulated funds in advancing the objectives of the program.

The full comments are available here → link.