According to the Terrorism Risk Insurance Act of 2002, what is true regarding reimbursement for insured losses?

The statement regarding reimbursement for insured losses according to the Terrorism Risk Insurance Act of 2002 indicates that the insurer is responsible for paying a deductible that is calculated as a percentage of the earned premiums from the previous year. This means that before the government takes on its share of the losses, the insurer must absorb some of the financial burden based on the premiums it received, which helps ensure that insurers remain financially responsible and allows for a shared responsibility in claims related to acts of terrorism.

This arrangement is crucial for maintaining the stability of the insurance market following significant events that might otherwise result in overwhelming claims. It creates a structure where insurers participate in the equation of risk and remain engaged in compensating their policyholders, while also ensuring that the government steps in to assist when those losses exceed specific thresholds.

It's important to recognize that the other options mischaracterize the specifics of the act. The government does not provide reimbursement in a single lump sum nor does it cover 100% of the losses, and losses from terrorist acts are, in fact, eligible for reimbursement under this act, subject to certain conditions and thresholds. Thus, understanding the deductible mechanism is key to comprehending how the Terrorism Risk Insurance Act allocates risk between insurers and the federal government.