The Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) is about to sunset. Just 11 months remain for Congress to act on its renewal, but the legislation appears stuck in limbo and professionals in the insurance industry are paying the price.
According to a new report from
Marsh, fears of terrorism-related losses are causing many insurers to scale back the policy options available for companies with a high concentration of employees in major cities.
“Because insurers cannot exclude terrorism-related losses and employers are required to buy it, the options available to buyers have been reduced and rate increases have accelerated,” Marsh said.
In fact, Marsh found that some insurers are actually setting policy expiration dates to coincide with the anticipated expiration of TRIPRA.
This transfer of risk onto buyers may make it difficult for producers in the workers’ compensation space to find affordable policies for clients in major cities. However, the issue is not without hope.
Both Marsh and the Risk and Insurance Management Society (RIMS) recommends helping employers represent themselves as less of a risk by offering detailed profiles of the business and its workers.
“The importance of providing a differentiated view of an organization’s terrorism risk profile to insurers cannot be overemphasized,” Marsh said. To achieve this, producers need to work with clients to “develop communication strategies and presentation tactics around all key risk exposures.”
Marsh identified marital/dependency status, the physical security of the building, access to the building, and management policies on workplace violence and weapons as key factors that could help clients obtain more feasible rates while waiting for congressional action on TRIPRA.
Meanwhile, RIMS suggests identifying peak times of employee traffic and which workers telecommute as ways to keep workers’ comp rates in check.
TRIPRA was originally passed in 2002 as the Terrorism Risk Insurance Act (TRIA), a federal backstop program that would help insurers shoulder terrorism-related risks. While it has been extended twice, lawmakers are decidedly more skeptical of the program and suggest carriers should have learned how to assess risk for terrorism since the September 11, 2001 attacks.
Meanwhile, players in the insurance industry continue to push for TRIPRA’s reauthorization.
“The fact that we haven’t had a terrorist attack in a few years doesn’t mean we won’t have one,” said Julie Rochmann, CEO of the Insurance Institute for Business and Home Safety. “In that case, having a safety net in place before it happens is the smartest thing to do.
