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TRIA’s renewed, and this means…

Well, that’s a relief. In a welcome display of bipartisanship, Congress passed and the President signed into law a six-year renewal of TRIA.  Here’s how AIA described the key elements and changes to the program:

Under the six-year extension in the bill, starting in 2016, there will be phased-in increases to the program’s trigger (raising it from $100 million to $200 million in annual aggregate insured losses) and the insurer co-share (raising it from 15 percent to 20 percent).  In addition, the bill phases in an increase in the aggregate amount of insured terrorism losses required to be borne by the private sector from the current $27.5 billion to $37.5 billion. Any use of taxpayer dollars to fund those losses would be recouped post-event.

I interviewed AIA Associate General Counsel and work comp expert Bruce Wood via email to get his take on the news.

MCM – What does this mean for workers’ comp?

Bruce – The extension of TRIA eliminates the uncertainty hovering over workers’ compensation insurers in providing coverage where the ultimate risk of loss is unascertainable because of the inability to exclude terrorism losses from workers’ compensation.

MCM – Some have criticized TRIA as unnecessary; can you speak to that?

Bruce – Some critics of TRIA have said not to worry, that employers would simply be written through residual markets.  But, it is insurers who backstop the losses in residual markets. In a state with a state fund serving also as the market of last resort, the backstop is either the state’s taxpayers or the state guaranty fund.  And, who backstops the guaranty funds?  The same insurers.

The ultimate irony for those who have criticized an extension of TRIA because it puts the government at risk is that without TRIA, the government is at even greater risk, as all losses would end up being socialized.

MCM – What about large, self-insured employers?

Extending TRIA also is beneficial to employers self-insuring, because they will be able to secure sufficient excess coverage to remain self-insured.  After 9-11, we saw some migration from the self-insurance market to the insured residual market because self-insured employers were unable to secure adequate excess coverage.  These included here is Washington, high-profile risks such as the Washington Post and the Kennedy Center for the Performing Arts.

What does this mean for you?

Six years of certainty – at least about this exposure.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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