The Terrorism Risk Insurance Act finally won passage through the US Senate at the end of November. The law took immediate effect, causing all terrorism exclusion clauses to be void. Insurers were given 90 days to develop premiums for terrorism coverage.

Under the US legislation, insurers are liable for 7%, 10% and 15% of their annual commercial property and casualty premiums before being eligible for federal assistance. Once the deductible is reached, the US Government will cover 90% of losses up to an annual program limit of $100 billion, leaving insurers with the remaining 10%.

But ratings agency Standard & Poor’s attacked the law for increasing the risks faced by insurance companies and casting a shadow on future industry ratings. S&P’s said the law creates “pitfalls and grey areas” for insurers and this could see the negative outlook on the industry worsen.