Correction: This story initially said that indicated the US Treasury had ruled that the Boston Marathon bombings were not an act of terrorism under the federal statute. That is incorrect. As the Treasury spokesperson says, the Treasury has not determined that there has been an “act of terrorism’’ under the statute. The story also incorrectly said the state had issued $1.9 million in bomb-related insurance claims. It was the state’s largest property and casualty insurers that issued the claims, not the state itself.
The Boston Marathon bombing attacks have not been certified as an “act of terrorism’’ by the US Treasury, an important point holding up some insurance payments.
In the wake of the 9/11 attacks, Congress passed the Terrorism Risk Insurance Act, which created federally-backed insurance in cases of damage due to terrorism. Some Boston businesses were among those that bought the insurance.
Those purchases became relevant after the Boston Marathon bombings on April 15, 2013. Of the 160 companies located near the marathon’s finish line that submitted insurance claims, just 14 percent had purchased terrorism insurance, Insurance Journal reported.
But as of March 2014, many of those that held terrorism insurance had their claims denied. Why? The Secretary of the Treasury Jack Lew has not certified the attacks as an act of terrorism for these insurance purposes, a requirement under the wording of the Terrorism Risk Insurance Act (TRIA).
“The Secretary has not determined that there has been an ‘act of terrorism’ under the Terrorism Risk Insurance Act,’’ a Treasury spokesperson emailed on Thursday.
Part of the reason for that ruling has to do with the amount of monetary damage done by the bombing. Under the federal law’s wording, a destructive act cannot be certified as terrorism if insurance losses total less than $5 million in aggregate. As of March, the state’s largest property and casualty insurers had issued $1.9 million in bomb-related insurance claims, The Boston Globe reported, well below the required $5 million amount. In addition, compensation is not paid out unless the aggregate losses total more than $100 million, according to the statute.
Still, the lack of a payoff hasn’t stopped Bostonians from buying the terrorism insurance since the bombings. As Boston-based brokerage firm William Gallagher Associates told Insurance Journal, about 80 percent of small and midsized customers own terrorism coverage, a jump from 50 percent before the marathon bombings.