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FOR IMMEDIATE RELEASE
OLDWICK - JULY 21, 2014 10:33 AM (EDT)
Two recently introduced pieces of legislation that aim to extend the current Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) signal bipartisan support to extend the federal backstop; however, the two bills increase the insurance industry's liability, according to a Best's Briefing.
The briefing, titled "Federal Terrorism Backstop Bills Would Place Greater Onus on Insurers," states that although substantial progress has been achieved toward extending the federal backstop, neither provides a permanent solution of risk sharing between the private sector and the federal government for insuring terrorism risks. The changes under the bills will impact the exposure for some insurers. If such an increase exceeds a company's risk tolerance and mitigation strategies are not available or affordable, it may result in non-renewal of concentrated risks. A.M. Best believes that although a federal backstop reduces the impact terrorism losses have on a company's risk-adjusted capitalization, over-reliance on such a mechanism is not a substitute for sound risk management.
For the full, complimentary copy of this briefing, which includes summaries of the two bills, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=227011 .
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