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A.M. Best Comments on Potential Lapse of TRIPRAWith the failure of the U.S. Senate to reach an agreement to extend the Terrorism Risk Insurance Protection Reauthorization (TRIPRA) Act before Congress adjourns, the federal terrorism insurance program will expire on Dec. 31, 2014. As previously stated in the December 2013 Best's Briefing, "No Rating Actions Taken on Insurers with Terrorism Exposure Despite Uncertain Future of TRIPRA," A.M. Best has determined that no rating actions on insurers previously identified as over reliant upon TRIPRA are necessary at this time. All of the rating units deemed overly reliant upon TRIPRA were brought before a rating committee to evaluate action plans that would be implemented in the event TRIPRA was not renewed or if its protection was materially altered. After a thorough review of these action plans, it was determined that sufficient mitigation initiatives were developed to avoid a material impact on a rating unit's financial strength. A.M. Best continues to monitor insurers' data quality relating to terrorism exposures, the concentrationof terrorism-exposed risks, as well as ensure that action plans have been followed through on for these mitigation initiatives. Any rating units that have not successfully mitigated their terrorism exposures, in the absence of TRIPRA, or have increased their terrorism-exposed business to a level deemed overly reliant upon TRIPRA will be evaluated and rating actions will be taken, when necessary. The possibility exists that both the House and Senate may debate a federal terrorism backstop after the 114th Congress is sworn in early in 2015. A.M. Best will monitor any future actions from Congress regarding the future of this backstop. The methodology used in determining ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. For more information on how terrorism risk is viewed by A.M. Best, please see the criteria report, "The Treatment of Terrorism Risk in the Rating Evaluation." A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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