Only a small number of organisations have used their captives to access the federal terrorism insurance backstop in the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2015.
This is the finding of Marsh’s 2015 terrorism risk insurance report, which found that of the 324 US-domiciled captives that Marsh managed in 2014, only 22 percent accessed TRIPRA.
Captives accessed TRIPRA for property coverage, writing terrorism coverage for conventional perils and/or for nuclear, biological, chemical, and radiological perils (NBCR) that are commonly excluded by commercial insurers, said Marsh.
“While organisations can benefit from captive insurance companies’ ability to access the federal terrorism insurance backstop, few US captives used TRIRPA for that coverage in 2014,” said the report.
Marsh recommended that organisations shouldwork with their insurance brokers and captive solutions advisors to evaluate whether using a captive for TRIPRA could provide a more effective solution for managing terrorism exposures, particularly for higher risk areas such as for property or employee-related coverages in major cities.
US-domiciled captives are obligated under TRIPRA to offer terrorism insurance when offering TRIPRA-subject lines of insurance. This includes property and general liability.
“Organisations with captives that buy out their trigger and co-insurance obligations should also plan for the likelihood of increased premiums startingin 2016 when the new law’s trigger and co-insurance phased increases take effect. The increases are likely to be more impactful on companies underwriting risks with Tier 1 locations,” added the report.
Terrorism Risk Insurance Program Reauthorization Act, TRIPRA, Marsh, North America, Terrorism, Captives