The US House of Representatives had passed an extension of the program earlier this month with a few changes. However, the US Senate failed to pass the legislation that would have extended the program before the current session of Congress ended.

The program was created under the Terrorism Risk Insurance Act of 2002 ("TRIA 2002"), which was passed following the September 11, 2001 terrorist attacks to create a system of sharing of losses from terrorist attacks between the private insurance industry and the US federal government.  The program was renewed until December 31, 2007 by the Terrorism Risk Insurance Extension Act of 2005 ("TRIEA") and was further renewed until December 31, 2014 by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (collectively with TRIA 2002 and TRIEA, "TRIA").

Under TRIA, commercial property insurers have been required to offer insurance coverage for losses from terrorist attacks for particular lines of business.  The US federal government, however, provided a $100 billion reinsurance backstop for terrorist losses meeting the criteria set forth in TRIA, including certification by the US Secretary of the Treasury that the losses arise out of an act of terrorism.  For certified terrorist acts, the US federal government agreed to cover 85% of losses after the first $100 million in aggregate insurance industry losses, subject to a deductible of 20% of an insurer's annual direct earned premiums on specified commercial property and casualty lines of business.  Without such a government backstop, there are serious concerns that many insurers will not offer terrorism coverage or that, if offered, such coverage will be very expensive.  Both the insurance industry and buyers of commercial insurance coverage strongly favor TRIA's renewal.

Such a renewal could potentially provide retroactive coverage back to January 1, 2015.  However, there is uncertainty about whether and when such a renewal will pass and, if it does pass, what the contours of the renewed program will be.  

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