London-based insurance broker Benfield said one of itssubsidiaries had its contract to administer the federal TerrorismRisk Insurance Program (TRIP) renewed after an extensive andcompetitive process.

Minneapolis-based Paragon Strategic Solutions, a consulting firmto the property-casualty insurance and reinsurance industry had itscontract to administer and be the statistical agent for the TRIPprogram renewed by the U.S. Treasury Department.

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

Paragon services include “mission-critical and seamless systemsand technology for claims submissions and processing, statisticalanalyses, the processing of periodic insurer statements forrecoupment of funds, reporting and general TRIP support.”

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

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

The GAO report examined availability of terrorism insurance in anumber 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 thatcoverage is available but some high-profile, high-value markets,such as New York, can still be a challenge for insureds and brokersto put together programs.

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

There was no consensus among industry participants and analystsover a need for any modification of the current plan, the GAO saidof its survey. Lowering the deductable could increase thewillingness of some insurers to offer more of the coverage, butothers cautioned that the effect may be limited.

Other proposals, such as creating terrorism coverage insurancepool or issuing catastrophe bonds, could enhance availability, butnot in the short terms, and could increase the federal government'sexposure to loses or reduce federal revenues.