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  • Writer's pictureBrian Mahon

Terrorism Insurance? How 9/11 Changed the Insurance Industry


It has been almost 20 years since the terrorist attacks on Sept 11th 2001. It's estimated that this infamous day cost about $30 billion dollars for the insurance industry after accounting for all claims.

It was truly a text book "black swan event" that put many insurance companies in an insolvent position. To avoid financial collapse, the government stepped in.

The feds passed the Terrorism Risk Insurance Act under George W. Bush in November of 2002.

This act created a federal "backstop" for insurance claims related to acts of terrorism.

If you've ever purchased business insurance in the last decade or so, you may have noticed a small little charge for "TRIA". Often a signature may have been required to accept or reject terrorism coverage. (See below sample)

This TRIA coverage is less than 3% of the annual policy premium. In exchange, you're covered for acts of terrorism! Yay!

but what does this actually mean?

How much coverage do you "get"?

How do you qualify?

Unfortunately it's not that simple.

So if you do opt for the TRIA coverage. Here is what you should know.

  1. The terrorism attack must be "approved" as terrorism by Secretary of the Treasury, Secretary of Homeland Security, and the U.S. Attorney General

  2. losses from said "approved" terrorist attack act must exceed $200 million in losses (2020+ figure)

  3. The insurance industry has to pay their share first (up to $27.5 billion (2007 figure)

BACKSTOP Then the feds will pay 80% while the insurance industry still has to be pay 20%

and the federal backstop will cap out at $100 billion annually

(more than twice the losses from the September 11 attacks)

The TRIA program does not try to predict the risks and potential costs (premiums) in advance. Rather the intent is to pool the risk and then distribute the costs of a loss after the terrorism incident.

It was extended by Obama, extended again by Trump, and is currently set to expire 12/31/2027.

Insurance isn't the only industry affected by terrorism.

It's obvious Tourism could decline in certain areas after attacks.

Utilities companies offering power (oil, electric, water etc.) may be a prime target.

In addition to more public displays of terrorism like government/public buildings & entities.

Do you opt in and cough up the 3% to cover yourself from the bad guys?

Or do you leave it up to chance?

Let me know!

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