Match each of the following Terrorism Risk Insurance Act (TRIA) financial mechanisms to it… — Insurance Producer License Exam

Match each of the following Terrorism Risk Insurance Act (TRIA) financial mechanisms to its correct statutory threshold or definition.

Program Trigger$200 million in aggregate industry-wide insured losses
Insurer Deductible20% of the insurer's direct earned premium from the prior calendar year
Federal Cost Share80% of covered insured losses that exceed the insurer's deductible
Program Cap$100 billion annual limit on combined government and insurer liability

Program Trigger matches to

200 million in aggregate losses; Insurer Deductible matches to 20% of prior year direct earned premium; Federal Cost Share matches to 80% of losses exceeding the deductible; Program Cap matches to the

100 billion annual limit.

Each TRIA threshold serves a specific statutory purpose to balance public and private risk. The Program Trigger (

200 million) activates the program. The Insurer Deductible (20% of direct earned premium) ensures private market retention. The Federal Cost Share (80%) provides the government backstop. Finally, the Program Cap (

100 billion) limits the maximum total liability.

Identify the threshold for the Program Trigger.

Matches to $200 million.

This is the minimum industry-wide loss required to activate the federal reinsurance sharing.

Identify the threshold for the Insurer Deductible.

Matches to 20% of direct earned premium.

Insurers must retain this specific portion of their own premium risk before federal funds apply.

Identify the percentage for the Federal Cost Share.

Matches to 80% of losses exceeding the deductible.

The government covers 80% of the remaining claim costs once an insurer meets their deductible.

Identify the limit for the Program Cap.

Matches to the $100 billion annual limit.

This serves as the maximum liability limit for the TRIA program annually.

Terrorism Risk Insurance Act (TRIA) Statutory Limits

Question