The Senate today passed the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2007, legislation that will extend the federal terrorism insurance backstop. The current federal terrorism reinsurance program commonly known as the Terrorism Risk Insurance Act (TRIA) is scheduled to expire at the end of the year.
The Senate version would renew TRIA for an additional seven years or until 2014, whereas the House version, passed in September, would extend the federal backstop for 15 years.
Both bills would eliminate the distinction between domestic and foreign terrorism. However, the Senate version does not contain other features that the House wants, including a provision mandating that insurers make available coverage for NBCR attacks.
Instead of including NBCR coverage as the House version does, the Senate passed bill provides for ongoing reports to Congress from the President’s Working Group on inclusion of coverage for group life and nuclear, biological, chemical and radiological (NBCR) events.
The Senate version also does not the lower retentions and deductibles the House supported. The Senate wants the government program to trigger after $100 million in losses, whereas the House sets the trigger at $50 million.
The White House had threatened to veto the House version. It opposes any expansion of the program.
“The Senate’s action comes at a critical time with just over a month until the terrorism backstop expires,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “We thank Chairman Dodd, Ranking Member Shelby, and Senate leadership for moving a long term extension through the Senate.
Now that TRIPRA has passed the Senate, there will need to be further negotiations or a Senate and House conference to forge another compromise between the two versions of legislation.
“We encourage both the House and Senate to reconcile their bills and send this crucial legislation to the President as soon as possible.” says Symington.
“Getting this legislation passed before the end of the year has been a priority for our members and we appreciate the Senate’s hard work to advance it a step closer,” says Jason Spence, Big “I” assistant vice president for federal government affairs.
The news of the Senate action was met positively by insurers as well.
The Property Casualty Insurers Association of America, while it supports a longer term and a lower event trigger, said it will continue to support the Senate TRIPRA.
“We commend the Senate for passing this bill, which would provide a long-term extension for this vital terrorism risk program and help us continue to insure an otherwise uninsurable risk,” David A. Sampson, president and CEO of PCI. Sampson noted that an extension of the federal terrorism insurance program will help provide market certainty for insurance consumers.
“We thank Senate Banking Committee Chairman Christopher Dodd, D-Conn., and Ranking Member Richard Shelby, R-Ala., for working together diligently to produce a bipartisan bill that the Senate could pass in a timely manner. We must also note, with gratitude, the important role played by House Financial Services Committee Chairman Barney Frank, D-Mass., and his colleagues in the House of Representatives for passing a bill that helped make a long-term terrorism solution possible.”
Gov. Marc Racicot, president of the American Insurance Association (AIA), also gave high praise to the U.S. Senate for unanimously passing the TRIA extension legislation.
“Today’s vote was a major step forward to the ultimate goal of reauthorizing the terrorism risk insurance program,” Gov. Racicot said. “By supporting a 7-year extension, the Senate has unanimously voiced their support for a continued, vibrant federal program. A seven-year extension will provide more stability and certainty in the market and will foster long-term investment and economic growth.”
Insurers and agents alike are prepared to work with legislators and stakeholders to help enact an extension before the current TRIA runs out at the end of the year.
“We now urge leaders on this issue in the House and Senate to move forward expeditiously to produce a unified bill that both houses of Congress can pass and that the President will sign into law before the program expires Dec. 31,” Sampson said.
Racicot noted that the next step is just as critical. “It’s absolutely necessary that the Congress continue their work and reauthorize this program by year’s end.” Racicot noted AIA
Sources: IIABA, PCI, AIA