Terrorism Risk Insurance Act: What it Means for Your eCommerce Business

Insurance providers in the US are mandated to offer terrorism risk insurance so businesses aren’t left vulnerable to terror attacks. The act that mandates this coverage is the Terrorism Risk Insurance Act.

What is the Terrorism Risk Insurance Act?

The Terrorism Risk Insurance Act (TRIA) is a federal law passed in the United States in 2002 that mandates insurers to offer terrorism risk insurance and acts as a federal backstop for insurance claims related to acts of terrorism. In other words, it includes a system for the burden of compensation to be shared between the government and insurance providers for insured losses resulting from certified acts of terrorism.

However, it’s important to note that policyholders aren’t required to purchase this coverage. 

Background

TRIA was initially set up as a temporary three-year measure but has been renewed several times due to its effectiveness, with the latest extension running through December 31, 2027. 

The primary purpose of this act was to stabilize the insurance market. Prior to 9/11, terrorism coverage was often included in commercial general insurance policies. But in the wake of the devastating attacks that cost the insurance industry $47 billion in losses, the market was in turmoil. Terrorism coverage was made prohibitively expensive or withdrawn by providers entirely due to the unpredictable and potentially catastrophic nature of such events.

How Terrorism Insurance Is Different

Unlike natural disasters, terrorist acts are unpredictable and intentional, making it challenging to assess risk and calculate premiums. The severity of attacks can vary greatly and their frequency is near impossible to predict, potentially causing a significant financial strain on insurance providers. 

Not to mention that claims from terrorism are often geographically concentrated, which increases the potential risk of bankruptcy on popular insurers in that area.

Federal involvement, as provided by TRIA, is considered necessary due to the high potential impact and unpredictability of terrorist acts.

Does Assureful Offer Terrorism Risk Insurance?

Here at Assureful, we understand the unique risks associated with terrorism and the importance of having adequate coverage. That’s why we offer TRIA at no extra charge. We believe in providing our customers with comprehensive protection, so they can focus on what they do best – running their businesses.

Acts of terrorism pose very real and unique risks to your business, but it’s easy to say “That’ll never happen to me” when it comes to adding to your insurance premium.

That’s why we offer Terrorism Risk Insurance at no extra cost to our eCommerce insurance customers.