As of December 31, 2014, the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIA”) will expire. Many industry participants had remained optimistic that TRIA would ultimately be extended before its expiration date which has led to questions and concerns from insurers and regulators alike as to the state of the industry going forward.
On December 26, 2014, the New York Department of Financial Services (the “NYDFS”) sent a request for a special report pursuant to Section 308 of the New York Insurance Law to all insurers licensed to write commercial property or liability insurance, including workers compensation, in the state (the “Letter”). The Letter requires that all recipients respond to a host of questions directly and indirectly relating to the impact of TRIA on the recipients’ operations by January 12, 2015. Such questions include whether the insurer (i) plans to non-renew any insurance policies presently subject to TRIA’s requirements, (ii) plans to limit its writing of new business for any particular lines, (iii) plans to take any rate action for any business or geographical location and the reasons therefor, (iv) plans to reduce available limits of liability for any business or geographical location, (v) provides terrorism coverage at the policy limit or terrorism coverage subject to any type of sublimit, and if so, how such policies define terrorism loss, (vi) is party to reinsurance agreements affected by TRIA’s non-renewal and (vii) will have a change in its financial condition due to TRIA’s non-renewal. The Letter notes that the NYDFS is particularly concerned about the negative impact TRIA’s non-renewal will have on the construction and insurance industries and will use the information to assess the pending consequences of TRIA’s expiration.
A copy of the NYDFS request is available here. We will continue to report on both market developments and regulatory responses to TRIA’s non-renewal.