Claims News Service, Oct. 3, 2:31 p.m. EST -- A new report from the President's Working Group on Financial Markets (PWG) provides updated insight into the Terrorism Risk Insurance Extension Act (TRIEA) of 2005 and the long-term availability and affordability of insurance for terrorism risk as well as coverage for chemical, nuclear, biological, and radiological (CNBR) events. TRIEA provides a federal backstop to limit the potentially devastating losses insurance companies could incur following a terrorist attack.

According to the report, while there are difficulties in evaluating the long-term nature of the terrorism risk insurance market with a government program in place, a number of developments it deems positive have occurred in the market since Sept. 11, 2006. These include improvements in the ability of insurers to model terrorism risk exposure, an increase in reinsurance capacity, an improvement in the financial health of the insurance industry, a willingness to underwrite additional terrorism risk insurance, falling or stable prices for terrorism risk insurance even as insurers' retention of risk has increased, and increased buyer demand for coverage.

The report went on to note that further improvements in insurers' abilities to model and manage terrorism risks likely will contribute to the long-term development of the terrorism risk insurance market. However, PWG said that the greater uncertainty associated with predicting the frequency of terrorist attacks along with what appears to be a general unwillingness of some insurance policyholders to purchase terrorism risk insurance coverage makes any evaluation of the potential degree of long-term development of the terrorism risk insurance market somewhat difficult.