Terrorism and catastrophic events

General information

Terrorism and catastrophe endorsement changes filed by NCCI | January 1, 2015

The National Council on Compensation Insurance (NCCI), Oregon’s authorized ratemaking organization, received approval from the Oregon Department of Consumer and Business Services (DCBS) for revisions to the terrorism and catastrophe endorsements.

NCCI revised the Terrorism Risk Insurance Program Reauthorization Act Disclosure Endorsement to amend and incorporate provisions brought about by the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2015, signed into law on January 12, 2015.

The only change NCCI made to the Catastrophe (other than Certified Acts of Terrorism) Premium Endorsement was to update the reference to the terrorism endorsement.

The endorsement changes brought about by TRIPRA of 2015 have no impact on workers’ compensation insurance:

• No change to workers’ compensation coverage
• No change to premium charges

Terrorism and catastrophe endorsements

In December 2020, SAIF mailed the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) endorsement to all existing policyholders. New policyholders received the endorsements at policy issuance.  

• Terrorism Risk Insurance Program Reauthorization Act Disclosure Endorsement  
• Catastrophe (other than Certified Acts of Terrorism) Premium Endorsement 

History of terrorism and catastrophe coverage

Terrorism Risk Insurance Act of 2002

As a result of the events of September 11, 2001, Congress passed the Terrorism Risk Insurance Act (TRIA) of 2002, creating a federal backstop for defined "acts of terrorism." This Act did not change the coverage provided by individual workers' compensation policies, but provided reinsurance for insurance companies in the event of a covered loss.

When TRIA was created, no portion of workers' compensation premium was devoted to the risk of loss associated with foreign terrorism. To fund this exposure, NCCI filed foreign terrorism risk rating values for each state. The Oregon rate was approved by DCBS and was shown on the Foreign Terrorism Premium (FTP) Endorsement attached to each policy.

Terrorism Risk Insurance Extension Act of 2005

TRIA was set to expire on December 31, 2005. Since foreign terrorism continued to be an exposure for workers' compensation insurance, Congress passed the Terrorism Risk Insurance Extension Act (TRIEA) of 2005, with certain amendments to event triggers and reinsurance amounts.

Domestic terrorism, earthquakes, and catastrophic accidents

After establishing a rate to cover the risk associated with acts of foreign terrorism, NCCI determined the exposure to risk associated with domestic terrorism, earthquakes, and catastrophic industrial accidents was still unfunded. On January 1, 2005, DCBS approved a new premium charge filed by NCCI to cover these exposures. This premium charge was separate from, and in addition to, the premium developed in response to foreign terrorism exposures. The approved rate was shown on the Domestic Terrorism, Earthquakes, and Catastrophic Industrial Accidents (DTEC) Premium Endorsement attached to each policy.

Terrorism Risk Insurance Program Reauthorization Act of 2007

When Congress extended the 2002 Act in 2007, it also revised the definition of "acts of terrorism" to include domestic terrorism, it updated insurer deductible provisions, and it set a $100 billion annual liability cap for insurance companies and the federal government. This new act, called the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2007, extended the Act until December 31, 2014.

The Terrorism Risk Insurance Program Reauthorization Act of 2015

Congress’ extension of the 2002 Act in 2015 raised the event trigger from $100 million to $200 million, in $20 million increments, starting in January 2016. It also increased the insurers’ deductible provisions from $27.5 billion to $37.5 billion, in $2 billion increments, starting in January 2016. TRIPRA of 2015 extends the Act until December 31, 2020. 

Additional resource

Please note that this link goes to a website of another organization. SAIF does not control its content. 

• Insurance Information Institute

FAQs

Following are some questions and answers regarding the Terrorism Risk Insurance Program Reauthorization Act of 2015, Terrorism Risk Insurance Program Reauthorization Act of 2007, the Terrorism Risk Insurance Extension Act of 2005, the Terrorism Risk Insurance Act of 2002, and the Domestic Terrorism, Earthquakes, and Catastrophic Industrial Accidents filing of 2005.

Why did I receive the terrorism and catastrophe endorsements?

You are receiving the terrorism endorsement because the Terrorism Risk Insurance Program Reauthorization Act requires that we notify you of the provisions of the Terrorism Risk Insurance Act of 2002 and the Program Reauthorization Act of 2015.

You are receiving the catastrophe endorsement because it was revised to update the reference to the terrorism endorsement.

Does this change my coverage?

No. The Terrorism Risk Insurance Program Reauthorization Act of 2015 does not change your coverage.

Will I have to pay more premium?

No. TRIA and its authorized extensions do not establish terrorism premium charges for insurers, so the 2015 reauthorization of Terrorism Risk Insurance Act of 2002 has no impact on your premium. The National Council on Compensation Insurance (NCCI) determines the premium charges and includes them in its rate filing for DCBS approval.

What are the endorsements that I just received?

Terrorism Risk Insurance Program Reauthorization Act Disclosure Endorsement 
The purpose of the endorsement is to notify all workers' compensation policyholders of the Terrorism Risk Insurance Act of 2002 as amended and extended by the Terrorism Risk Insurance Program Reauthorization Act of 2015, signed into law on January 12, 2015. It explains how an insurance company, like SAIF, would be protected by the federal reinsurance program created by the 2002 Terrorism Risk Insurance Act and updated through the Program Reauthorization Act of 2015. The reinsurance created by these Acts is triggered by defined acts of terrorism. The endorsement also provides notice of the premium charge for the risk of certified acts of terrorism.

Catastrophe (other than Certified Acts of Terrorism) Premium Endorsement
This endorsement provides notice of the premium charge for the risk of catastrophic events, including earthquakes, defined catastrophic industrial accidents, and noncertified acts of terrorism.

I thought we always had terrorism coverage. Why do we have to pay now for something we've always had?

While it's true your workers' compensation policy has always provided coverage for acts of terrorism and catastrophes, prior to the September 11, 2001, terror attack, the risk of loss was considered negligible and not specifically included in rate-making. After 9/11, the National Council on Compensation Insurance (NCCI) developed special terrorism and catastrophe premium charges for each state. NCCI continues to evaluate the premium charges as part of its rate-making process.

Do I have to pay this if I don't want terrorism and catastrophe coverage?

Yes. You cannot elect to forego either terrorism coverage or catastrophe coverage. Workers’ compensation policies cover all compensable, on-the-job injuries no matter their cause.

Is every workers' compensation carrier charging premium for terrorism and catastrophe exposures?

To our knowledge, yes. DCBS approved the premium charges for use by all Oregon workers’ compensation insurers.

Will the charge for these exposures be the same every year?

We don't know. NCCI usually files rates annually to be effective as policies renew on, or after, January 1 each year. There is no guarantee the rate will stay the same every year.

Who gets to keep the terrorism and catastrophe exposure premium?

Premium collected to cover the risk of terrorism or catastrophic losses is kept by the insurance carrier just the same as premium collected to cover any other risk.

Who gets the money in the event of certified losses?

Any monies paid by the federal government under the provisions of the Act would be paid only to those insurance carriers who have perfected a claim or claims under the Act.