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Chapter 9 Reinsurance market 9/29

The only exclusions
applying to the
terrorism cover
are in respect of:

damage to computer
war and systems caused by
related risks virus, hacking and
similar actions

There is no exclusion for chemical, biological, radiological or nuclear contamination and the terrorism
cover provided by the Pool Re member is able, subject to the terms of the policy, to respond in situations
in which damage has been caused by such means.
There are some insurance companies and Lloyd’s syndicates which provide specific coverage on a case-
by-case basis. This type of underwriting is done on a strictly facultative basis as considerable
information has to be provided on each and every risk to ensure that coverage can be given.

Useful website
www.poolre.co.uk

F1B USA
The Terrorism Risk Insurance Act (TRIA) is a US federal law created in 2002. The Act created a federal
‘backstop’ for terrorism claims. The Act was intended as a temporary measure to allow time for the
insurance industry to develop its own solutions and products to insure against acts of terrorism. The
latest renewal expires at the end of 2020 and is known as the Terrorism Risk Insurance Program
Reauthorization Act (TRIPRA) of 2015. Reference copy for CII Face to Face Training

Although it does not currently buy reinsurance for its own exposures, TRIPRA created a US Government
TRIA created a US
reinsurance facility to provide reinsurance coverage to insurance companies following a declared Government
terrorism event. It established the Federal Terrorism Insurance Program to administer a system of reinsurance facility
shared public/private compensation for insured losses resulting from acts of terrorism in order to protect
consumers. TRIPRA shall only apply to those acts certified by the US Secretary of the Treasury in
consultation with the Secretary of Homeland Secretary as meeting the definition of a terrorist act.
The event must also cause losses from at least US$100m in 2015 and increasing to US$200m by 2020.
Consider this…
In the USA an act of terrorism is defined as
…any act certified by the Secretary of Treasury, in concurrence with the Secretary of State and Attorney
General, to be an act that is dangerous to human life, property, or infrastructure and to have resulted in
damage within the USA (or outside the USA in the case of a US-flagged vessel), or on the premises of a
US mission.
How does this definition vary from that used in other countries?

Each individual company has its own ‘trigger’ or ‘deductible’ linked to a percentage of its premium Chapter
income, which is currently 20%. When the trigger is activated, the Federal Government pays 85% of 9
insured terrorism losses in excess of the trigger whilst the insurer pays 15%. Following the latest renewal
of TRIPRA, the Federal share is to reduce by 1% per calendar year until 2020, with a corresponding
increase in the insurer’s retention. Losses remain capped at US$100bn. Congress will determine how to
calculate any losses above this, if such an event occurs.
In respect of reinsurance contract renewals, reinsurers excluded TRIPRA-certified events. However,
insurers were then offered separate cover for domestic attacks, although this typically excluded events
including nuclear, chemical or biological weapons.