London-based insurance broker Benfield said one of its subsidiaries had its contract to administer the federal Terrorism Risk Insurance Program (TRIP) renewed after an extensive and competitive process.

Minneapolis-based Paragon Strategic Solutions, a consulting firm to the property-casualty insurance and reinsurance industry had its contract to administer and be the statistical agent for the TRIP program renewed by the U.S. Treasury Department.

Paragon was first selected in 2004 to provide the Treasury Department with services to manage and activate the program in the event of claims from the terrorist attack.

Paragon services include “mission-critical and seamless systems and technology for claims submissions and processing, statistical analyses, the processing of periodic insurer statements for recoupment of funds, reporting and general TRIP support.”

Kevin Campion, Benfield's executive vice president bragged in a statement that, “The renewal of our contract is a testament to the expertise and excellent services that the Paragon team has provided to the U.S. Treasury Department in its implementation of [the Terrorism Risk Insurance Act] during the past four years.”

Under TRIA, insurers are responsible for a 20 percent deductable of their direct earned premiums from the previous year to cover related losses, according to a Government Accountability Office report issued in September. The federal government covers 85 percent of the insured loss up to $100 billion on an annual basis after insurers pay their deductible.

The GAO report examined availability of terrorism insurance in a number of high profile markets including New York City, Atlanta, Boston, Chicago, San Francisco and Washington, D.C.

While reaching no overall conclusion, the report did say that coverage is available but some high-profile, high-value markets, such as New York, can still be a challenge for insureds and brokers to put together programs.

Prices are still viewed as reasonable, but several insurers “remained concerned about the exposure they retained” and are making efforts to minimize potential losses. This does make obtaining terrorism insurance more expensive in some areas, the GAO said.

There was no consensus among industry participants and analysts over a need for any modification of the current plan, the GAO said of its survey. Lowering the deductable could increase the willingness of some insurers to offer more of the coverage, but others cautioned that the effect may be limited.

Other proposals, such as creating terrorism coverage insurance pool or issuing catastrophe bonds, could enhance availability, but not in the short terms, and could increase the federal government's exposure to loses or reduce federal revenues.

Special Reports /

Benfield Subsidiary TRIA Contract Renewed

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