Replying to the comments below, please keep in mind that the insurance industry itself largely (though not unanimously) endorsed such a program after Sept. 11th, when terrorism exclusions started popping up.
Hopefully the chances we will actually need to activate TRIA coverage program will remain remote. But in the event we do have to activate it, those who have purchased private insurance, thereby submitting to private underwriting and loss control, should be “first in line” for federal support on a preferential basis.
I understand your arguments and it gave me pause because it explains why the backstop is seen as unnecessary: without naming an incident as terrorism, no payouts are forthcoming. My opinion is that the logic for the backstop needs to be refined and your arguments are a very good starting point. It would broaden coverage but would make other money available for many events that are otherwise funded by taxpayer resources. There’s a lot of cash already paid in; what happens to that now and will that be sufficient to fund a response to a broadened but more specific definition? Congress should pick up the debate and see what is possible, instead of the current program.
What might happen ? Little of nothing is what will happen. There will be private sector insurance companies that will step in and provide ‘real’ coverage. In it’s current form, TRIA might never pay a dime out to anyone. The current coverage triggers and other ‘qualifying’ events are so onerous that even calling it ‘coverage’ is ludicrous.
The only people that I see regularly requiring the purchase of TRIA are lenders who don’t care how much it costs or how little it does just so long as they can check that box in their loan file.
Sorry for the self-promotion, but this is uncompensated commentary on a topic for insurers. I think there’s a real problem with the trigger for federal terrorism reinsurance, and I address the matter here:
https://www.linkedin.com/pulse/change-terrorism-reinsurance-trigger-joseph-s-harrington-cpcu/
with a follow-up here:
https://www.linkedin.com/pulse/changing-federal-terrorism-reinsurance-trigger-harrington-cpcu/
Replying to the comments below, please keep in mind that the insurance industry itself largely (though not unanimously) endorsed such a program after Sept. 11th, when terrorism exclusions started popping up.
Hopefully the chances we will actually need to activate TRIA coverage program will remain remote. But in the event we do have to activate it, those who have purchased private insurance, thereby submitting to private underwriting and loss control, should be “first in line” for federal support on a preferential basis.
I understand your arguments and it gave me pause because it explains why the backstop is seen as unnecessary: without naming an incident as terrorism, no payouts are forthcoming. My opinion is that the logic for the backstop needs to be refined and your arguments are a very good starting point. It would broaden coverage but would make other money available for many events that are otherwise funded by taxpayer resources. There’s a lot of cash already paid in; what happens to that now and will that be sufficient to fund a response to a broadened but more specific definition? Congress should pick up the debate and see what is possible, instead of the current program.
What might happen ? Little of nothing is what will happen. There will be private sector insurance companies that will step in and provide ‘real’ coverage. In it’s current form, TRIA might never pay a dime out to anyone. The current coverage triggers and other ‘qualifying’ events are so onerous that even calling it ‘coverage’ is ludicrous.
The only people that I see regularly requiring the purchase of TRIA are lenders who don’t care how much it costs or how little it does just so long as they can check that box in their loan file.