Senate Approves Terrorism Insurance Backstop Extension

The Senate passed the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2007, its version of 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 although some say support could be garnered for the Senate’s version.

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 Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations.

The news of the Senate action was met positively by insurers.

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,” said 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.

“By supporting a 7-year extension, the Senate has unanimously voiced their support for a continued, vibrant federal program,” said Gov. Marc Racicot, president of the American Insurance Association. “A seven-year extension will provide more stability and certainty in the market and will foster long-term investment and economic growth.”

“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.

Topics Catastrophe Natural Disasters Legislation Politics