TRIA

Question 1

Impact of 9/11

Answer 1

Reinsurers withdrew from market (Could not accurately price)
Primary insurers also withdrew
TRIA must be offered, but not compulsory

Question 2

TRIA coverage amount: Small losses

Answer 2

No coverage

Question 3

TRIA coverage amount: Medium losses

Answer 3

Gov’t role to spread loss over time and entire industry

Question 4

TRIA coverage amount: Large losses

Answer 4

Government covers most of loss (recoupment possible)

Question 5

Goals of TRIA

Answer 5

Create temporary federal program of shared compensation for terrorism losses
Protect consumers (ensure avail/afford of terrorism insurance)
Preserve state regulation of insurance

Question 6

Loss payments, TRIA

Answer 6

Losses > $5M to be eligible for TRIA
Aggregate industry losses > $100M before gov’t
Each insurer deductible = 20% of DIRECT annual premium
Gov’t pays 85% of insured losses up to $100B

Question 7

Insurability of terrorism risk

Answer 7

Lack of substantive data

Question 8

Elements of insurable risk (terrorism)

Answer 8

Must be sufficiently large number of insureds (for predictability) - NO
Losses must be definite and measurable - YES
Losses must be fortuitous or accidental - NO
Losses must not be catastrophic - ?

Question 9

TRIA LOBs covered

Answer 9

ONLY commercial lines

Question 10

Certifying of act of terrorism

Answer 10

Must be certified by Secretary of Treasury, Secretary of State, and Attorney General