WASHINGTON – The U.S. Department of the Treasury’s Federal Insurance Office (FIO) today released a report entitled “Study of Small Insurer Competitiveness in the Terrorism Risk Insurance Marketplace” (Study). The Terrorism Risk Insurance Act of 2002, as amended (TRIA), requires FIO to conduct and release the Study every other year.
The Study analyzes data that was collected by Treasury concerning the participation of insurers in the Terrorism Risk Insurance Program (TRIP). TRIA established TRIP, which requires insurers to make terrorism risk coverage available within certain lines of commercial insurance. To assist insurers with the resulting potential financial exposure, certain insurance losses are eligible for reimbursement through TRIP if they result from an “act of terrorism” as defined by TRIA and certified as such by the Secretary of the Treasury. The Study finds that small insurers are significant participants in the market for terrorism risk insurance in the United States, with a stable market share over the past few years that remains characterized by a lower charge for terrorism risk insurance than assessed by larger insurers. The Study also notes that small insurers may continue to face some challenges related to the Program Trigger under TRIP and the purchase of commercial reinsurance to address exposures not backstopped by TRIP.
FIO, which was established within Treasury by the Dodd-Frank Wall Street Reform and Consumer Protection Act, monitors all aspects of the insurance sector, and assists the Secretary in administering TRIP.