The Terrorism Risk Insurance Program, set to expire in 2027, has materially changed the terrorism insurance market since its creation in 2002. In an updated insight, Director of Financial Services Policy Thomas Kingsley discusses whether this federal backstop remains necessary after more than two decades of growth in private terrorism insurance and reinsurance capacity.

He concludes:

The original rationale for a terrorism risk insurance program was that the private insurance market had effectively stopped functioning for terrorism risk following September 11, and that is no longer an accurate description of the market. Commercial terrorism coverage is broadly available, private reinsurance capacity has expanded, and the federal government’s share of catastrophic losses has declined substantially since 2002. The private market has demonstrably developed, but development has not eliminated the rationale for federal risk sharing across all categories of terrorism risk.

Read the analysis.