AM Best says proposed TRIA reauthorization shifts more terrorism risk to insurers

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TRIA reauthorization shifts risk

Highlights

The proposed Terrorism Risk Insurance Program Reauthorization Act of 2026 extends the federal backstop for terrorism risk through Dec. 31, 2034, pending reconciliation of House and Senate versions.
House legislation increases the program trigger to $10 million from $5 million, shifting greater terrorism loss responsibility to insurers, especially impacting smaller and regional carriers.
AM Best will require disclosure of risk mitigation plans from materially exposed insurers and may consider rating actions if legislative changes shift more risk from the federal program to insurers.

Congressional extension and program changes

As reported by AM Best, the proposed Terrorism Risk Insurance Program Reauthorization Act of 2026 extends the current federal backstop beyond the scheduled 2027 expiry to Dec. 31, 2034, although differences between House and Senate versions still need to be resolved.

The insurer ratings agency says the House legislation would increase the trigger for the program to $10 million from $5 million, shifting more responsibility for terrorism-related losses onto insurers. Its commentary says the threshold still remains low relative to modeled terrorism scenarios involving dense commercial property concentrations, but the effect of the change is not likely to be uniform across the industry.

Steven DeLosa, senior financial analyst at AM Best, says national insurers with diversified exposures and substantial capital resources may be better placed to absorb the added risk, while smaller and regional carriers may face greater pressure because they have fewer ways to diversify terrorism exposure and more limited access to alternative risk transfer solutions.

Rating implications for insurers

The House bill also requires the Secretary of the Treasury to certify an act of terrorism within 90 days after publishing initial notice that an event is under review. AM Best says that timeline gives insurers more certainty about whether the federal backstop applies after a potential event, though it also could raise the risk of a premature or inaccurate determination.

AM Best continues to view TRIPRA as an effective federal backstop for terrorism-related losses, but not a replacement for strong risk management. Beginning in the first quarter of 2026, the agency compiles a list of rated insurers with terrorism exposure and says carriers with material exposure and significant reliance on TRIPRA will be asked to disclose mitigation plans if the program changes.

The agency says it will keep monitoring terrorism exposure data across rated insurers and may take rating actions where necessary. That stance signals potential pressure on carriers that depend heavily on the federal program if lawmakers approve terms that transfer more risk to the private market.

Our earlier article on Plenitude’s investment-grade rating examined how Eni’s energy-transition unit is funding a capital-intensive 2026–2030 expansion, with capex set to stay above €2 billion a year and leverage expected to peak before easing. We noted that the rating outlook hinges on disciplined capex execution, managing merchant power exposure, and continued shareholder support, including a €1.56 billion capital increase and Eni retaining a 65% stake—factors that help protect standalone funding access despite constrained leverage headroom.

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