Two Decades of the Terrorism Risk Insurance Program

Photo by tommao wang on Unsplash
  • Program compliance testing and enforcement; and
  • Lessons learned from COVID-19.
  • TRIP data calls.[2]
  • The federal share of compensation for insured losses under the Program.[4]
  • Findings, trends, fines, orders, or other observations from those activities;
  • Limitations or weaknesses in state and federal oversight of Program compliance;
  • Coordination of state and federal compliance strategies and activities; and
  • Other strategies, plans, or activities intended to reduce the risk of participant non-compliance leading to failure of Program payments or post-payment recovery actions.
  • The potential loss of public trust in a catastrophe risk program that is perceived to allocate public funds unfairly or inequitably. For example, Treasury’s analysis of prior data calls shows that up to 85 cents of every Program dollar would be paid out to special purpose subsidiaries of large corporations (known as captive insurers) rather than to support small and medium-sized businesses that rely on traditional insurers for terrorism coverage.
  • The Program’s interaction with hastily assembled and enacted catastrophe relief programs in the weeks and months after an act of terrorism. For example, it is unclear how a terrorism relief program modeled after the Paycheck Protection Program would interact with TRIP’s prohibition on duplicative compensation. It would appear the Paycheck Protection Program model may create a risk that participating insurers would bear the cost of that Program through reduction in TRIP recoveries while policyholders receive windfall duplicative recoveries.[7]

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Jason Schupp

Jason Schupp

Founder and Managing Member of Centers for Better Insurance, LLC