Treasury Extends the 'Make Available' Provisions of the TRIA

The “make available” provisions require that, from the date of enactment (Nov. 26, 2002) through the last day of the second year of the Program (Dec. 31, 2004), each insurer must make available, in all of its commercial property and casualty insurance policies, coverage for losses due to covered acts of terrorism that does not differ materially from the terms, amounts and other coverage limitations applicable to losses arising from events other than acts of terrorism. This decision is triggered by the TRIA, which requires that the Secretary of the Treasury determine whether the “make available” provisions should be extended through the third and final year of the program by Sept. 1, 2004. Additionally, the TRIA mandates that the Treasury complete a study of the effectiveness and success of the overall Act by June 2005. This comprehensive study is independent from the “make available” determination.

In making the determination to extend the “make available” provisions, the Treasury Department considered the perspective of both users and providers of terrorism risk insurance. The Treasury had published a request for comment in the Federal Register on May 5, 2004, on the statutory factors (eg, effectiveness of the TRIA, capacity, availability, and affordability) with regard to the “make available” determination. When the comment period closed on June 4, 2004, almost 200 comments were received. Based on the comments received and other information, the Treasury found a widespread belief that the “make available” provisions have contributed to the effectiveness of the TRIA by providing customers with offers of terrorism risk insurance that would otherwise have been unavailable. The Treasury also found that it is widely believed that the “make available” requirement has contributed to the affordability and availability of terrorism risk insurance under the program, and may have increased the attention devoted by insurers to questions of capacity to offer coverage. The Treasury found that while little evidence was provided in direct support of these views, there also was little or no evidence presented that the “make available” provisions had harmed affordability, availability, or capacity.