Premium savings and broader coverage are some of the benefits on offer to US captives following the passage of the Terrorism Risk Insurance Program Reauthorisation Act (TRIPRA).
This is according to Marsh, which added that US-domiciled captives are obligated to offer terrorism insurance under TRIPRA.
This means that organisations need to carefully examine their captive structures and TRIPRA’s requirements to ensure compliance and to take best advantage of the program when addressing terrorism risks.
According to Marsh, US captives must consider coverage limitations created by TRIPRA’s trigger, loss certification requirements, and the $100 billion programme cap.
Marsh added that although the US Department of the Treasury recognises the important contributions of captive insurers in making available terrorism coverage, it cautions captive owners about the inherent conflict of interest and unusual level of control a policyholder has over an insurer in a captive insurance transaction.
“The warning emphasises that captive owners should not take actions that would improperly reduce an organisation’s overall share; for example, captive insurers should not deliberately underprice the premium in order to reduce the captive’s TRIPRA deductible,” said Marsh.
Marsh, TRIPRA, North American, Insurance