The US Terrorism Risk Insurance Act (TRIA) has brought stability, affordability and availability to the US terrorism cover market, according to a new study from the Insurance Information Institute.

The legislation was enacted in 2002 to deal with the withdrawal of cover following the September 11 2001 attacks, and has been revised and extended three times.

It expired at the end of last year before the latest six-year extension was signed into law on January 12.

“By all measures the terrorism risk insurance program remains an unqualified success – a rarity among federal programs – that has continuously achieved all its goals,” the institute says.

“The program not only succeeded in restoring stability to the country’s vital insurance and reinsurance markets in the wake of the unprecedented market dislocations associated with the September 11 2001 terrorist attacks, but it continues to deliver substantive, direct benefits to businesses, workers, consumers and the economy overall – all at little or no cost to taxpayers.”

The report comes as the Australian market waits for publication of a Treasury review of the Australian Reinsurance Pool Corporation (ARPC).

The review, held every three years, is still pending.

ARPC CEO Chris Wallace told insuranceNEWS.com.au the renewal of TRIA was “an important event in the global terrorism insurance marketplace”, providing certainty and stability.

“In the US, insurers must cover the first layer of losses up to 20% of an insurer’s direct earned premium,” he said.

“But even with this large insurer deductible and a robust private market to cover the deductible, the report shows there remains insufficient capacity to insure losses greater than the insurer deductibles without government participation through a backstop or guarantee.

“Terrorism schemes like TRIA, and like the ARPC, therefore provide an important protection to the insurance industry and to policyholders, which protects the economy and supports economic resilience following a terrorism event.”