Terrorism Risk Insurance Act of 2002

Risk Management, April 2003 | Go to article overview

Terrorism Risk Insurance Act of 2002


What does this historic federal legislation mean,for property-casualty insurers, producers and risk managers?

The world changed for all of us on 9/11/2001. For those of us in the property-casualty insurance industry--insurance carriers, agents, brokers and risk managers--our world changed again on 11/26/2002. That was the day President Bush signed the Terrorism Risk Insurance Act of 2002.

The legislation, which was more than one year in the making, became law immediately upon the president's signature. Just as quickly, questions started cropping up. How does this legislation really work? What is the federal backstop? How does the federal government define terrorism? How will underwriters view it? What will this terrorism coverage cost? What happens after 2005?

Now that our industry is about a half year into implementing the Terrorism Risk Insurance Act, many of those questions have been answered. However, as the implementation process evolves, new questions are surfacing. As Zurich North America CEO John Amore said, "The Terrorism Risk Insurance Act is certainly not the final answer to managing terrorism risks, but it creates a short-term infrastructure that starts us down that path." The critical test now is to implement the regulatory features of the bill in a manner that fosters a creative and flexible marketplace.

While there are many questions, one thing we know for sure is that the Terrorism Risk Insurance Act has forced risk managers to focus on their terrorism exposure and better assess their risk transfer needs. By now, many of us have worked through the transitional issues presented by the legislation, including the temporary suspension of existing terrorism exclusion and initial policyholder notices. Before exploring the longer-term ramifications of the Act, it is worth recalling the basics:

The three elements of the Terrorism Risk Insurance Act of 2002

* Availability. Insurers are generally required to "make available" coverage for losses resulting from acts of terrorism on the same terms and limits as coverage for other losses. In practical terms, the "make available" requirement means making coverage available without specific exclusions or limitations for acts of terrorism.

* Disclosure. The Act requires insurers to disclose the premium charged for the terrorism exposure and the federal share of any terrorism losses in all new and renewal quotes and policies.

* Federal participation. The federal government will share in certain terrorism losses through 2005. In order to trigger the federal backstop, the "certified" terrorism events in any one calendar year must result in significant losses. By some published estimates, net federal participation does not attach until $10 billion in terrorism losses for 2003 and increasing thereafter.

The "certified" act of terrorism These three elements (availability, disclosure and federal participation) only relate to "acts of terrorism" as defined in the Act. Because an "act of terrorism" must be certified by the Secretary of the Treasury (in concurrence with the Secretary of State and the Attorney General), the shorthand "certified act of terrorism" is often used. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Terrorism Risk Insurance Act of 2002
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.