Terrorism insuranceInsurers thankful for reauthorization of TRIA

President Barack Obama signed in a six year renewal of Terrorism Risk Insurance Act (TRIA) last Tuesday, and workers comp insurers sighed in relief after thirteen days of uncertainty following the expiration of the previous bill at the end of 2014.

As Insurance Journal reports, prior to the TRIA renewal, insurance executives expressed surprise and disappointment that the bill, which backs insurers in the event of large claims due to terrorism, had expired. Some outside of the industry had expressed concerns that insurers might restrict the offering of policies, raise premiums, or take other actions in response. Many remained calm, however, and the eventual renewal came to pass.

“If there was a concern that [TRIA renewal] wasn’t going to pass, I think you would have seen carriers in the larger markets holding off on offering renewal quotations,” said Frank Scott, the senior vice president with USI Insurance Services in Valhalla, New York. “The problem is that because all state have some type of non-renewal laws, unless the carriers sent them out, they were going to be on the hook to write this as of [January 1^st] anyway.”

Also, insurers were convinced that the negative backlash against Congress for allowing TRIA to expire would have been too great for lawmakers not to renew the law.

Christopher Flatt, the leader of March Worker’s Compensation Center of Excellence, speculated on the thought of if there be any panic in the marketplace if there was no renewal.

“I wouldn’t say panic,” he said, “I think the reaction, obviously, has been negative. People are disappointed that Congress didn’t take the time to reauthorize TRIA, especially given that both houses of Congress had basically agreed on what a future bill would look like and then it got hung up on a technicality.”

Others speculated that the collective cool of the marketplace in those thirteen days was also due to planning.

“My opinion is the work comp market has already responded to this,” said Mark walls, the vice president of communications and strategic analysis for Safety National in Missouri. “In February of last year, the work comp industry started writing coverage that contemplated that they’d be on the loss without TRIA. All year long they’ve been issuing policies that go more and more into 2015.”

Lastly, the sheer number of carriers and options has made the workers comp marketplace less reactive.

“There’s overcapacity in most of the markets we’re in, so if any insurer has pulled back, the remaining players will pick up the slack,” said J. Douglas Robinson, the CEO of Utica National Insurance. “We haven’t seen a spike in new business submissions that would indicate other insurers are pulling back.”

Overall, the insurance marketplace has adopted a “wait and see” approach to TRIA’s expiration, choosing to overlook expiration dates and trusting that lawmakers would understand that not renewing TRIA would be a bad option, even while criticizing some aspects of the act. The industry now goes back to business as usual.