During a compliance audit, an insurance regulatory specialist is reviewing a carrier's operational protocols regarding federal statutory programs. When evaluating the carrier's adherence to the Terrorism Risk Insurance Act (TRIA), which of the following statements are correct? (Select all that apply.)
- Commercial property and casualty insurers are mandated to offer terrorism coverage, but the insured has the voluntary option to accept or reject the offer.Cevap
- Federal financial assistance is only triggered when aggregate industry losses exceed a specific statutory threshold and the individual insurer has met its designated deductible.Cevap
- COnce an event is certified, the federal government functions as the primary insurer and directly pays all policyholder claims, entirely relieving the carrier of its liability.
- DState Directors or Commissioners of Insurance possess the statutory authority to certify an event as an act of terrorism if the event occurs exclusively within their state borders.
Cevap
The correct statements are that insurers must offer the coverage (which insureds can reject) and that federal assistance requires meeting both industry-wide aggregate thresholds and individual insurer deductibles.
The correct statements accurately reflect the two primary pillars of the Terrorism Risk Insurance Act. First, TRIA requires commercial property and casualty insurers to 'make available' terrorism coverage, which the policyholder can voluntarily reject. Second, TRIA operates as a federal backstop, meaning the government shares in the losses only after industry-wide losses reach the program trigger and the individual insurer has paid its required deductible.
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TRIA Mandatory Offer and Federal Backstop Mechanics
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