Senate Passes TRIA Renewal with Broker Licensing Provision

By Andrew G. Simpson | July 17, 2014

In a 93-4 vote, the Senate today passed the Terrorism Risk Insurance Program Reauthorization Act of 2014 (S. 2244 ) that extends the federal reinsurance program for seven years.

In addition to extending the Terrorism Risk Insurance Act (TRIA) for seven years, the Senate bill (embedded below) increases the co-pay for private insurers from 15 percent to 20 percent.

The Senate also added legislation creating a national registry of insurance producers, the National Association of Registered Agents and Brokers (NARAB II), as an amendment.

Only four  senators, all Republicans, voted against the measure: Sens. Marco Rubio, Florida; Lamar Alexander, Tennessee; Tom Coburn, Oklahoma and Pat Roberts of Kansas.

The Senate bill differs in a number of ways from a House bill on TRIA that passed out of committee last month. The House version would renew TRIA for only five years and further cut back on government involvement in the program. The House bill currently also contains a NARAB provision.

Congress first passed TRIA in 2002 in the wake of the Sept. 11 terrorist attacks as a temporary program.  TRIA was designed to protect the commercial insurance market and its customers by requiring insurers to offer terrorism coverage in exchange for the government stepping in with reimbursement if the industry’s losses exceed $100 million after a single terrorist attack.

TRIA has been twice reauthorized with bipartisan congressional support but it will expire at the end of this year unless the House and Senate can agree on renewing it.

The insurance, banking and construction industries and other proponents have argued that TRIA provides important stability in the terrorism insurance market and that without it private insurers would find it difficult, if not impossible, to provide the coverage businesses need.

“Before TRIA, the risk of terrorism and the lack of available coverage ground commercial development almost to a halt, costing billions of dollars and thousands of lost jobs,” said Jimi Grande, senior vice president of federal affairs for the National Association of Mutual Insurance Companies (NAMIC).

He said that thanks in part to TRIA now more than 60 percent of companies in the United States have terrorism coverage in place, and major construction and development continues happen across the country.

While seeing neither bill as perfect, the insurance industry has generally preferred the Senate bill, which was sponsored by Sens. Chuck Schumer (D-N.Y.) and Dean Heller (R-Nev.), over the House version.

The Obama Administration supports the Senate bill. “Terrorism insurance is necessary for a broad range of economic activities in areas across the country, and would be prohibitively expensive or unavailable in the absence of the program,” the White House said in a statement today.

The Independent Insurance Agents & Brokers of America (Big “I”) praised the Senate’s bipartisan action on TRIA and NARAB II.

“Agents and brokers must have the ability to provide terrorism protection to their customers in the event of another unthinkable attack on American soil,” said Bob Rusbuldt, Big “I” president and CEO. “The current TRIA program has worked well to ensure the availability of this coverage and it is imperative that a lapse be avoided.”

Insurance lobbyists took special note of the lopsided and bipartisan favorable vote in the Senate.

“We commend the Senate Banking Committee for producing a bill that could garner such broad, strong bipartisan support, and urge the House to pass TRIA reauthorization legislation before the August recess,” said Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA).

“It is great to see members of both parties come together in a broad bipartisan fashion to support America’s economic resiliency plan to recover from terrorist attacks,” said Nat Wienecke, senior vice president, federal government relations of the Property Casualty Insurers Association of America (PCI).

“The overwhelming, bipartisan support we’ve seen for this reauthorization demonstrates how much it [TRIA] has done for our nation, and how important it is to our economy,” said Charles M. Chamness, president and CEO of the National Association of Mutual Insurance Companies (NAMIC).

House Bill

Critics of TRIA, including taxpayer, consumer and conservative groups, maintain that TRIA is unnecessary and an example of government involving itself where it should not in the private sector. They argue that private insurers, despite their denials, are capable of providing terrorism without a government backstop. They also point out that TRIA was initially intended as a temporary program.

Rather than eliminate TRIA, opponents have largely sought to limit TRIA and reduce the exposure of the government to losses in the event of a terrorist attack. The House bill (H.R. 4871) would extend TRIA for five years, increase the insurer co-pay to 20 percent, and create a new program bifurcation for nuclear, biological, chemical, or radiological (NBCR) type of attacks.

The House legislation would increase from $100 million to $500 million the loss amount from a terrorist attack using conventional weapons that would trigger government reimbursement. The House bill, however, keeps the trigger at $100 million for a nuclear, biological, chemical or radiological attack. The Senate version keeps the trigger at $100 million regardless of the type of terrorist attack.

NARAB Amendment

The Big “I” and other commercial lines and wholesale agent and broker do groups have been pushing the NARAB legislation for a number of years and, while grateful for its inclusion in the TRIA bill, they have more work to do because the Senate’s NARAB provision includes a two-year sunset provision they oppose.

“While the amendment contains a ‘sunset’ provision that the Big ‘I’ would like to see changed before the measure is enacted into law, it was critically important to move the bill forward in the legislative process,” said Charles Symington, Big “I” senior vice president of external and government affairs.

NARAB promises to streamline the licensing process for producers doing business in multiple states.

“[W]e will continue demonstrating the benefits vibrant competition provides to policyholders in a streamlined national producer licensing system where agents can achieve full reciprocity of their licensing requirements in the states in which they write business on behalf of their customers,” AAMGA President Matt Letson of Hanover Excess & Surplus Agency in Wilmington, N.C. said in a statement vowing to work to remove the sunset provision from NARAB.

PCI’s Wienecke also applauded the Senate for adding the NARAB amendment:

“NARAB II is common sense legislation that creates a streamlined agent and broker licensing system that strengthens the competitive insurance market and protects consumers. We call on Congress to come together and send a TRIA bill with NARAB II to the president’s desk before the August recess.”

Sens. Jon Tester (D-Mont.) and Mike Johanns (R-Neb.) sponsored the NARAB II amendment.

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Latest Comments

  • July 17, 2014 at 4:28 pm
    Steve Soindheim says:
    No, the Senate Bill essentially leaves things as they are (some minor changes for industry) and extends for 7 years. Pity about the House version. Mostly bad, but it would hav... read more
  • July 17, 2014 at 2:57 pm
    Puzzled in PA says:
    Amended post...As I read the bill, the industry participation moves from 80% to 85% at a rate of 1% per calendar year and total gross loss remains at $100 million for the seve... read more
  • July 17, 2014 at 2:51 pm
    Puzzled in PA says:
    This means that a the cost of a terrorism event has to exceed $500 million before the government would step in to fund 80% of the remaining amount. In some areas, like Manhat... read more
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