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The U.S. Senate has allowed the Terrorism Risk Insurance Act (TRIA) to lapse. The legislation to reauthorize TRIA was passed by the House of Representatives by a vote of 417-7, but not acted upon by the Senate. The law is set to expire on December 31, 2014.
TRIA provides a government-backed insurance facility which operates as a backstop for Property Insurance losses in the event of a terrorist attack. It makes the federal government the “insurer of last resort” for large public buildings such as athletic venues and infrastructure such as airports, bridges and dams.
Without TRIA, experts expect rates to rise and for many organizations to go without coverage for terrorist acts. Large construction projects may be put on hold unless coverage is available. The NFL has announced that it will not cancel the 2015 Super Bowl, but other large public events may be impacted.
Generally, insurers will have the ability to cancel terrorism coverage as of January 1. Many are expected to add terrorism exclusions to policies that do not already have them.
The legislation to renew TRIA will likely be introduced again by the House in January, but passage is indeterminate. Until then, we are entering a period of uncertainty, and many questions remain.