Terrorism risk insurance, market challenges may exist for current structure and alternative approaches : report to congressional committees.

Format:

Book

Government document

Author/Creator:

United States. Government Accountability Office, author.

Language:

English

Subjects (All):

Terrorism Risk Insurance Program (U.S.).

Terrorism insurance--United States--Finance--Evaluation.

Terrorism insurance.

Terrorism--Economic aspects--United States.

Terrorism.

Risk (Insurance)--United States--Finance--Evaluation.

Risk (Insurance).

Terrorism--Economic aspects.

United States.

Genre:

Online resources.

Physical Description:

1 online resource (iii, 118 pages) : color illustrations

Other Title:

Market challenges may exist for current structure and alternative approaches

Place of Publication:

[Washington, D.C.] : United States Government Accountability Office, 2017.

Summary:

"After the terrorist attacks of September 11, 2001, insurers generally stopped covering terrorism risk because losses could be too high relative to the premiums they could charge. Congress enacted TRIA to share losses from a certified act of terrorism between insurers and the government, address market disruptions, and help ensure widespread availability and affordability of terrorism coverage. TRIA does not include an up-front federal charge for the government's share of potential losses. The act mandates that, when private industry's losses are below a certain amount, the federal government recoups some or all of the federal share of losses through policyholder surcharges. The Terrorism Risk Insurance Program Reauthorization Act of 2015 includes a provision for GAO to review alternative funding approaches for TRIA. Among other things, this report examines (1) how insurers manage their terrorism exposure and federal recoupment of losses, (2) how alternative funding approaches could be designed and implemented, and (3) the potential effects of these approaches as well as the current structure. To assess these funding approaches, GAO reviewed related studies, analyzed several terrorism loss scenarios for each funding approach to estimate potential effects on market participants, and interviewed industry participants"--Preliminary page

Contents:

Background

Insurers use various tools to manage their terrorism risk exposure and may charge premiums for coverage although they face pricing challenges

Federal share of terrorism losses and recoupment requirements depend on event size and aggregate premium base of affected insurers

Alternative funding options pose trade-offs and complexities

Both TRIA's current funding structure and alternative funding options could adversely affect the market, but some factors could help mitigate the effects.

Notes:

"January 2017."

Includes bibliographical references.

Online resource; title from PDF title page (GAO, viewed January 18, 2017).

OCLC:

968792442