TRIA extension passed

The Terrorism Risk Insurance Revision Act of 2005 has been approved by a voice vote from house lawmakers in December 2005. The legislation was, at time of press, left waiting a sign-off from President Bush.

The federal terrorism backstop is in line to be renewed in two years. The new legislation, which follows a Senate version that is favourable to the Bush administration, will result in the insurance industry’s retention and event trigger increasing over the next two years.

It reads that as of 2006, the backstop will engage when losses resulting from insured events greater than $50 million occur. Terrorism insurance in 2007 will be triggered when losses from insured events greater than $100 million occur.

The backstop also says that group life, commercial auto, surety and professional liability are among the insurance lines that will be excluded from TRIA coverage.

Property and general liability will be covered under the backstop, however property policies will not be required to cover nuclear, biological, radiological or chemical attacks.

In regards to the TRIA extension, chairman and CEO of Willis Group Holdings Ltd. (NYSE:WSH), Joe Plumeri, stated that the two year extension of TRIA is a recognition by legislative leaders that the federal government must partner with the private insurance markets to protect the country’s national financial and economic security.

“By providing a backstop against unsustainable losses,” Plumeri said, “the TRIA extension enables insurers to provide coverage to businesses engaged in construction, real estate management, tourism and a host of other activities that are essential to the U.S. economy.”

Plumeri reported that terrorism requires a permanent and long-term solution.