TERRORISM INSURANCE LAW EXPIRES DECEMBER 31,2005

As Europe braces for more terrorism and steps up security, the US debates the continuation of the federal terrorism insurance law, TRIA (Terrorism Risk & Insurance Act). The law provides financial back-up, in effect reinsurance, for a major terrorism event, and requires the private insurance industry to offer the coverage. Coverage has therefore been available in the US (although the Act does not control pricing of the insurance, and prices quoted have ranged from very reasonable to what amounts to price gouging).

The law sunsets at the end of this year and there is no guarantee, as of now, that it will be renewed; the debate rages in congress and within the administration. If it is not renewed, most likely terrorism coverage will dry up or will be prohibitively expensive. Companies with high risk and/or vulnerability should consider this possibility in their planning for 2006.