The "Terrorism Risk Insurance Act" (TRIA) was first signed into law by President George W. Bush on November 26, 2002 in response to the September 11 terrorist attacks. TRIA essentially operates as a public-private partnership in the form of a federal reinsurance backstop. If the worst should happen and a need for the program were to arise, TRIA has numerous cost-sharing provisions designed to limit the exposure of the federal government, protect taxpayers and maximize private sector involvement. Since most insurers offer terrorism coverage to their clients, the market has become competitive and premiums affordable.
TRIA has been reauthorized three separate times since 2002. The most recent reauthorization provides for a six year extension of the program and includes the following modifications:
- Gradually raising the program trigger from $100 million to $200 million over a five year period
- Decreasing the federal government's share in losses from 85 percent to 80 percent
- Insured losses will have to exceed $37.5 billion, instead of $27.5 billion, in order to avoid mandatory recoupment
- Retroactively restores the federal reinsurance backstop for policyholders and the insurance market in the event of a catastrophic act of terror on American soil