Terrorism Risk Insurance Extension Act of 2005

Terrorism Insurance Resource Center



On December 22, 2005, the President signed compromise legislation extending the Terrorism Risk Insurance Act of 2002 (TRIA) for two years—through 2007. ISO's terrorism programs comply with the provisions of the extension without a need for immediate revisions.

As enacted, the Terrorism Risk Insurance Extension Act of 2005 closely follows the provisions of the Senate TRIA extension bill passed on November 18—with the significant exception that the threshold for declaring a certified act of terrorism remains at $5 million. Because of that change, ISO's portfolio of terrorism exclusion endorsements and the related rules still allow insurers to implement the provisions of the bill. Insurers can use the full array of tools that ISO developed to manage the terrorism exposure for lines of business subject to TRIA—and for lines not subject to TRIA.

A few provisions of the final bill are worth noting:

  • The per-event threshold for federal government participation in insured losses for an act of terrorism occurring after March 31, 2006, will be $50 million, increasing to $100 million for an act of terrorism occurring on or after January 1, 2007.
  • The bill excludes commercial auto, burglary and theft, surety, professional liability (other than directors and officers liability), and farm owners multiple peril from TRIA.
  • The insurer deductible will be 17.5% in Program Year 4 (2006) and 20% in Program Year 5 (2007).
  • The industry retention increases to $25 billion in Year 4 and $27.5 billion in Year 5.

Because ISO designed its conditional endorsements to meet contingency situations—and because the definition of a certified act has not changed—new forms filings were not immediately necessary. However, we will change certain forms to reflect changes in TRIA. Refer to circular LI-CF-2006-032 for details.

Follow the links for:

You will soon be redirected to the 3E website. If the page has not redirected, please visit the 3E site here. Please visit our newsroom to learn more about this agreement: Verisk Announces Sale of 3E Business to New Mountain Capital.