Proposed changes to the federal terrorism insurance backstop could increase the trigger to $10 million from $5 million and require insurers to take on more terrorism losses, according to new AM Best commentary.

The proposed Terrorism Risk Insurance Program (TRIA) Program Reauthorization Act of 2026 extends the expiration for the current Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2027 to Dec. 31, 2034. Both chambers of Congress have approved the extension, though differences between their bills still need to be resolved; it is set to expire at the end of 2027. The Best’s Commentary, “TRIA Reauthorization Extends Federal Backstop While Shifting More Risk to Insurers,” states that the House legislation’s increased trigger places greater responsibility on insurers and could influence underwriting, pricing and capital allocation. The commentary notes that the threshold remains low relative to modeled terrorism scenarios affecting dense commercial property concentrations, but the financial impact of the change would not be uniform across the insurance industry.

“National insurers with diversified exposures and substantial capital resources may be better positioned to retain the additional risk, but smaller and regional insurers may be disproportionately affected, as they may have fewer opportunities to diversify terrorism exposure and limited access to alternative risk transfer solutions,” said Steven DeLosa, senior financial analyst, AM Best.

The House bill also requires the Secretary of the Treasury to certify an act of terrorism within 90 days of publishing the initial notice that an event is under review for certification as an act of terrorism. The 90-day certification requirement would provide insurers with greater certainty by establishing a defined timeline for determining whether the federal backstop will apply following a potential terrorist event, although a potential downside of the 90-day timeline could be an increased risk of a premature or inaccurate determination.

AM Best considers TRIPRA an effective federal backstop against terrorism-related losses, but not as a substitute for strong risk management practices. Beginning in the first quarter of 2026, AM Best compiled a list of rated insurers with exposure to terrorism. Insurers viewed to have material terrorism exposure, in addition to a significant reliance on TRIPRA, will be asked to disclose mitigation plans regarding changes to the program. AM Best will continue to monitor insurers’ terrorism exposure data and will take appropriate rating actions as necessary.

To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=369233.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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