Legislation that will extend the 2002 Terrorism Risk Insurance Act for an additional two years passed on the House of Representatives floor today. The House bill (S. 467) passed by a vote of 371 to 49. The Senate already approved its version of S. 467, the “Terrorism Risk Insurance Extension Act of 2005,” last month.
TRIA, passed a year after the attacks of Sept. 11, 2001, created a temporary federal program of shared compensation for losses from terrorist events. But the current prorgam expires on Dec. 31, 2005.
Current Senate and House bills would continue the program but with some changes, including raising the trigger point for federal aid from $5 million to $50 million in the first year and $100 million in the second year.
Last week there were concerns that the House bill might be delayed due to committtee jurisdictional issues but that issue was resolved.
“The House’s action today is a major step to making TRIA reauthorization a reality prior to Congressional adjournment,” said David Winston, NAMIC’s senior vice president – federal affairs.
House passage of vital terrorism insurance legislation increases the chances that the nation’s economic protection against terrorist attacks on U.S. soil will extend beyond Dec. 31, according to the American Insurance Association (AIA).
“We appreciate that the House acted in a decisive and timely manner,” said Leigh Ann Pusey, AIA senior vice president, government affairs. “We are confident the same type of leadership will prevail in getting the House and Senate bills reconciled. Our nation’s economic security depends on it.”
“So many critical economic decisions depend on the availability of terrorism coverage, making the TRIA extension imperative to avoid marketplace instability,” said Winston.
Industry groups are now urging the Senate and House leaders to move a workable terrorism insurance bill to the President’s desk.
“We are now on the cusp of keeping a much-needed terrorism backstop in place,” said Charles E. Symington Jr., Independent Insurance Agents & Brokers of America’s senior vice president for government affairs and federal relations. “We are very confident that an extension can make it through conference and to the President’s desk before the end of the year, and we will do everything we can to help accomplish this goal.”
In addition to extending the federal backstop on a short-term basis, the House bill helps address the long-term need for coverage, according to the Big “I.” It will encourage risk-sharing mechanisms and authorize capital-reserve accounts that will help the market increase its own capacity and phase out federal involvement eventually. A public-private, nine-member commission and several studies are proposed in the bill, including a Big “I”-supported natural-disaster study.
In addition to raising the trigger point for federal aid to $50 million in 2006 and $100 million in 2007, the Senate bill also requires that insurers make coverage available to policyholders in all lines covered by the program, and sets individual insurer retention levels at 17.5 percent of premiums collected in TRIA-covered lines in 2006 and 20 percent of such premiums in 2007. The House bill sets various premiums for differing types of coverage.
“The Big ‘I’ has consistently supported the continuation of the current terrorism insurance backstop or a modified one, and it has noted in testimony before Congress that action is needed before the Terrorism Risk Insurance Act (TRIA) expires,” said IIABA CEO Robert Rusbuldt. “This legislation is crucial for the business customers of independent agents and brokers, for continued economic growth in America, and for our nation’s economic security.”