The temporary lapse of the federal terrorism reinsurance backstop has spurred growth in the stand-alone market, with greater buyer interest in purchasing private insurance and more insurers offering private coverage of the risk, brokers and insurers say.

President Barack Obama last week signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2015, which extends the federal backstop, originally established by the Terrorism Risk Insurance Act in 2002, through 2020. Its provisions include gradually increasing the program trigger to $200 million in losses from the previous $100 million and the insurance industry retention to $37.5 billion from the previous $27.5 billion.

“We now have a good bill that provides certainty for both building owners and developers and is very important to New York,” Shari Natovitz, New York-based senior vice president of risk management at Silverstein Properties Inc., said in an email

While hailing the return of the backstop that had expired Dec. 31, some industry groups are pushing for a permanent solution (see related story).

During the nearly two weeks the program lapsed, some clients turned to stand-alone coverage to plug the gap, said Tarique Nageer, New York-based senior vice president and head of terrorism placement and advisory at Marsh L.L.C.

“For certain clients, there was an additional expense,” Mr. Nageer said. Those that cancel the gap coverage face what is known as a minimum earned premium, or the amount they must pay no matter when they cancel the coverage.

“The marketplace in general was seeking minimum earned premiums running from 25% to 50%” of the overall premium for private terrorism coverage, said one senior underwriter, who asked not to be named.

“In some cases, some of the big carriers were granting 30- and 60-day extensions of coverage,” said Aaron Davis, New York-based managing director at Aon P.L.C.'s property broking unit. “Those carriers that went that route will have greater continuity of coverage for our clients than those that went the exclusionary route.”

An informal survey of some 60 insurers showed about 80% had a grace period, and an even higher percentage would waive sunset clauses on a case-by-case basis, said Mr. Nageer.

Hiscox Inc., for example, extended coverage through the first quarter of this year backed solely by the company, according to a letter Hiscox CEO Ben Walter sent to its U.S. brokers.

Hiscox quoted and bound “a lot more” stand-alone terrorism business than normal in the last two weeks of 2014, said Jennifer Rubin, New York-based vice president and underwriting leader of war, terrorism and political violence coverage at Hiscox USA.

So far, there have been few cancellations, she said.

“What we're hoping is that clients who went into the stand-alone market are here to stay. Even though the bill has been reauthorized, buyers may decide "I don't want to go through this again,'” Ms. Rubin said.

“The delay in getting this done gave us a glimpse of what challenges we would all face if TRIA were not available as a backstop,” Silverstein Properties' Ms. Natovitz said.

“A sizable number of markets expressed an interest to Aon should TRIA expire and still have a keen interest in entering the stand-alone terrorism market,” said Aon's Mr. Davis. “Our expectation is that we will continue to see an uptick in stand-alone entrants as well as takeup by our clients.”

“We did see some new capacity enter the market in late December and into the first couple weeks of January,” said Marsh's Mr. Nageer.

“I think you're going to find other players are going to try to jump into the conventional terrorism space, but there will still be a reluctance to come into the nuclear, biological, chemical and radiological space,” said Wendy Peters, Radnor, Pennsylvania-based executive vice president of the terrorism practice group at Willis North America Inc.

“We've had a couple of companies come into the marketplace offering stand-alone coverage,” said Ironshore Inc.'s James Dover, senior vice president of the terrorism and sabotage insurance practice in New York.

Sources said insurers providing more capacity recently include Starr Surplus Lines Insurance Co. and Berkshire Hathaway Specialty Insurance. The insurers could not be reached for comment.

Last year, Valhalla, New York-based broker USI Insurance Services Inc. introduced a stand-alone terrorism facility with Amlin P.L.C. as the lead Lloyd's of London syndicate, which it later doubled to $200 million, company officials said.

Mr. Dover said that unlike the federal law that requires government certification to trigger the federal backstop, private terrorism coverage does not require government certification to successfully make a claim.

“There is definitely a demand from customers for the stand-alone solution over the government solution, particularly when they understand the nuances of the cover,” Mr. Dover said.

“Any concerns over insurers applying terrorism exclusions have now been lifted,” said Brad Wood, senior vice president of risk management with Marriott International Inc. in Bethesda, Maryland.

“We expect a rational market will continue now that TRIA has been reauthorized,” he said.