Terrorism Finance Act 2009

The Terrorism Risk Insurance Act (TRIA), enacted in 2002 and subsequently reauthorized, is a United States federal law designed to address market disruptions caused by major terrorist attacks. While TRIA itself doesn't directly address terrorism finance, it's important to understand its role in mitigating the economic consequences of terrorism, as countering terrorist financing aims to prevent these attacks in the first place.

TRIA's primary purpose is to provide a federal backstop for commercial property and casualty insurance losses resulting from acts of terrorism. This backstop ensures that insurance companies can continue to offer coverage for terrorism risks, preventing widespread unavailability or unaffordability of such insurance. Without TRIA, insurers might be hesitant to cover potential losses from terrorist attacks, leading to significant economic instability after a major event.

The Act operates by creating a public-private partnership. Insurers are required to offer terrorism risk coverage, and in the event of a certified "act of terrorism," the federal government shares in the losses above a certain deductible. This deductible is based on a percentage of the insurer's prior year's direct earned premiums. The federal government's share of the losses is capped at a certain amount, and insurers are responsible for repaying a portion of the federal assistance through surcharges on future premiums.

Several key elements define what constitutes a "certified act of terrorism" under TRIA. The act must be violent or dangerous to human life, property, or infrastructure; result in damage within the United States; and be certified by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General, as an act of terrorism. Crucially, the act must be committed on behalf of a foreign person or foreign interest, intending to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion.

The existence of TRIA has several important implications related to countering terrorism finance. Firstly, by providing a stable insurance market for terrorism risks, TRIA reduces the potential for economic chaos following an attack. This stability makes it harder for terrorists to achieve their goals of disrupting society and undermining confidence in the economy. Secondly, the reporting requirements associated with TRIA, while not directly focused on financial transactions, contribute to a broader understanding of the potential economic impacts of terrorism, which can inform efforts to counter terrorist financing. Thirdly, a functioning insurance market allows businesses to operate with greater confidence, encouraging investment and economic growth. A strong economy is less vulnerable to the destabilizing effects of terrorism and, therefore, less susceptible to the influence of terrorist groups.

While TRIA doesn't directly target terrorist financing, its role in stabilizing the economy and mitigating the economic impact of terrorism is vital. By ensuring that insurance coverage remains available and affordable, TRIA contributes to a more resilient economy, making it more difficult for terrorists to achieve their strategic objectives. Furthermore, a strong, stable economy strengthens the overall ability of the United States to combat terrorism on all fronts, including efforts to disrupt and dismantle terrorist financing networks.