Danis Insurance Center

The National Association of Insurance Commissioners (NAIC) is committed to working with Congress, the Administration, state officials, and the industry to develop a long-term plan to make terrorism insurance available and affordable to everyone. President George W. Bush signed the Terrorism Risk Insurance Program Reauthorization Act of 2007 (the Act) December 26, 2007.

Several provisions of the initial Act changed during 2007. Some of the more significant changes include:

Revising the definition of a certified act of terrorism to eliminate the requirement that the individual(s) are acting on behalf of any foreign person or foreign interest.
Extending the program by seven years through December 31, 2014.
Requiring clear and conspicuous notice to policyholders of the existence of the $100 billion cap.
Fixing the Insurer Deductible at 20% of an insurer’s direct earned premium, and the federal share of compensation at 85% of insured losses that exceed insurer deductibles.
Fixing the program trigger at $100 million for all additional program years.
Requiring the U.S. Treasury to promulgate regulations for determining pro-rata shares of insured losses under the program when insured losses exceed $100 billion.
Requiring the Comptroller General to study the availability and affordability of insurance coverage for losses caused by terrorist attacks involving nuclear, biological, chemical, or radiological materials and issue a report not later than one year after the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007.
Requiring the Comptroller General to determine whether there are specific markets in the United States where there are unique capacity constraints on the amount of terrorism insurance available and issue a report not later than 180 days after the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007.
Requiring the President’s Working Group on Financial Markets to continue an ongoing study of the long-term availability and affordability of terrorism risk insurance.
Accelerating the timing of the mandatory recouping of the federal share through policyholders’ surcharges.
In the absence of private market innovations and solutions, sustaining a viable private market for terrorism insurance depends on a federal backstop. The NAIC and state insurance commissioners play an essential role administering the terrorism risk insurance program—issuing timely guidance to insurers and consulting with the U.S. Department of the Treasury and its Terrorism Risk Insurance Program Office.

The NAIC has played an active role in fostering the program and providing assistance to insurers and the federal government as the program is implemented. The NAIC and its members have also testified before both houses of Congress on the need to extend the program.