	Introduction

Prior to the September 11, 2001 terrorist attacks, insurance covering terrorism losses was normally included in general insurance policies without a specific premium being paid for this coverage. In response to the new appreciation of the threat and the perceived inability to calculate the probability of loss and gather the loss data critical for pricing insurance, both primary insurers and reinsurers pulled back from offering terrorism coverage. Because insurance is required for a variety of economic transactions, many feared that a lack of insurance against terrorism loss would have wider economic impact, particularly on large-scale developments in urban areas that would be tempting targets for terrorism. Congress responded to the disruption in the insurance market by passing the Terrorism Risk Insurance Act of 2002 (TRIA) , which was signed by the President in November 2002. TRIA created the Terrorism Risk Insurance Program, which was enacted as a temporary program, expiring at the end of 2005, to calm the insurance markets through a government backstop for terrorism losses and give the private industry time to gather the data and create the structures and capacity necessary for private insurance to cover terrorism risk. Terrorism insurance became widely available under TRIA, and the insurance industry greatly expanded its financial capacity in the three years from 2002 to 2005. Again fearing economic disruption from the absence of terrorism insurance, Congress passed, and the President signed, the Terrorism Risk Insurance Extension Act of 2005 (TRIEA) in December 2005. TRIEA extended the program for two years while increasing the private sector exposure under the program. There was, however, little concrete movement towards adopting such proposals. As was the case in the TRIA extension debate in 2005, the House bills were more significant revisions and expansions of the TRIA program, whereas the Senate bill had a narrower focus—extending the program while making more limited changes. H.R. 2761 as passed by the House included provisions that would have made the following changes to the current Terrorism Risk Insurance Program:
extended the TRIA program for 15 years, until the end of 2022; made spending by the program contingent on passage of a future joint resolution; added coverage for domestic terrorist acts in the program; added the Secretary of Homeland Security to the certification process; added group life insurance to the program with a separate set of retentions and deductibles; returned farmowners multiple peril as a covered line; reduced the general trigger to $50 million; required insurers to cover nuclear, biological, chemical, and radiological (NCBR) terrorist attacks starting in 2009; lowered insurer deductible for NCBR attacks to 3.5% immediately and then raised that number by 0.5% per year in the future; increased the federal share of NCBR losses from 85% to as high as 100% for attacks causing over $100 billion in losses; temporarily preempted state laws on rate and form filing for NCBR coverages; provided the possibility of relief from NBCR requirement to smaller insurers; reset individual insurer deductibles to 5% and the program trigger to $5 million in the aftermath of a future terrorist attack (or series of attacks) that causes more than $1 billion in damage. On November 16, 2006, the Senate took up the House-passed version of H.R. 2761 , and amended it by unanimous consent with S.Amdt. At this time, however, the Senate did not request a conference with the House to reconcile the differences between the two versions of H.R. 2761 . Terrorism Risk Insurance Program Reauthorization Act of 2007 (H.R. 4299 consisted of the language of H.R. 2761 as passed by the Senate, plus the text of the amendment to H.R. The House considered H.R. 4299 under the provisions of H.Res. 2761 was signed by the President on December 26, 2007, becoming P.L. P.L.
Prior to the September 11, 2001 terrorist attacks, insurance covering terrorism losses was normally included in general insurance policies without additional cost to the policyholders. Following the attacks, both primary insurers and reinsurers pulled back from offering terrorism coverage. Because insurance is required for a variety of economic transactions, it was feared that a lack of insurance against terrorism loss would have a wider economic impact.
Congress responded to the disruption in the insurance market by passing the Terrorism Risk Insurance Act of 2002 (TRIA, P.L. 107-297, 116 Stat. 2322). TRIA created a temporary program, expiring at the end of 2005, to calm the insurance markets through a government backstop for terrorism losses, and to give the industry time to gather the data and create the structures and capacity necessary for private insurance to cover terrorism risk. From 2002 to 2005, terrorism insurance became widely available and largely affordable, and the insurance industry greatly expanded its financial capacity. There was, however, little apparent success on a longer term private solution and fears persisted about wider economic consequences if insurance were not available. Congress responded to the expiration of TRIA with the passage of the Terrorism Risk Insurance Extension Act (TRIEA, P.L. 109-144, 119 Stat. 2660). TRIEA extended the TRIA program until the end of 2007 while increasing the private sector exposure to terrorism risk.
The two years under the extended TRIA program were very similar to the three years under the first act. The market for terrorism insurance improved, but doubts remained as to capacity of the private sector to finance large-scale terrorism risk in the United States, as well as whether terrorism risk can be considered an insurable event at all. In response, the House passed H.R. 2761 in the 110th Congress, which would have extended the TRIA program 15 years and made substantial other changes. The Senate also passed H.R. 2761, after amending it with language from S. 2285, which would have extended TRIA seven years while making more limited changes to the underlying law. The House then passed H.R. 4299, which contained the language of the Senate-passed H.R. 2761 plus some of the provisions from the previous version of H.R. 2761. The differences between the House and Senate bills included the inclusion of group life insurance, restrictions on life insurers' use of travel in underwriting, lowering the deductible and trigger after a large terrorist attack, and the reduction of the program trigger to $50 million. The Senate, however, did not act on H.R. 4299, and the House ultimately agreed to the amended version of H.R. 2761 that was previously passed by the Senate. The President signed this bill into law on December 26, 2007.
This report briefly outlines the issues involved with terrorism insurance and includes a side-by-side of the previous TRIA law, the two House TRIA-extension bills, and the Senate bill that was ultimately signed by the President. It will not be updated. For more complete information on the issue, please see CRS Report RL34025, Terrorism Risk Insurance: Issue Analysis and Legislation, by [author name scrubbed].