The U.S. House of Representatives passed the Terrorism Risk Protection Act (HR 3210) by one vote of 227-193 on the afternoon of Nov. 29. According to the Independent Insurance Agents of America (IIAA), the legislation provides that in the event a future terrorist attack causes an insurance company to incur a loss equal to 10 percent of its capital surplus or a loss exceeding $100 million, the federal government would provide the company with a loan. Such loans, which would be repaid by insurers, would be equal to 90 percent of total exposure.
According to the IIAA CEO Robert A. Rusbuldt, passage of the legislation clears the “first major hurdle in the effort to get a critically needed legislative remedy in place before year’s end.”
According to the Washington Post, one of the bill’s co-authors, Rep. Michael G. Oxley (R-Ohio), said the House bill should not be viewed as bailing out insurers but as a measure to help keep the nation’s economy strong. Oxley also said that the country needs to be prepared given the prevailing threat of potential terrorist attacks. The legislation was also sponsored by Rep. Richard Baker (R-La.), chairman of the Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee.
IIAA’s Berthoud also noted insurance industry concerns that when the vast majority of reinsurance contracts expire on the first of the year, terrorism coverage will become largely unavailable.
In an effort to reach a compromise proposal which can be introduced as a Senate bill, Majority Leader Tom Daschle (D-S.D.) is currently working with Banking and Commerce Committee Democrats.
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