The chairman of the House committee dealing with terrorism insurance and renewal of the Terrorism Risk Insurance Act vowed Wednesday to have a bill out of committee this year.
“I am committed to delivering a bill this year,” declared Rep. Michael Oxley (R-Oh.), chairman of the House Financial Services Committee. “I think it would be the height of irresponsibility to let TRIA expire.”
“I feel an enormous responsibility to move a bill forward,” Oxley added.
Oxley made his promise at a hearing at which Treasury Secretary John Snow appeared. Snow’s department issued a report last week that found that TRIA has worked but recommended that it not be renewed in its current form.
At the hearing, Snow insisted that the Administration supports a federal terrorism program but only with reforms that put more responsibility on the private sector. He pointed to the conditions that the Treasury report set forth including higher deductibles and co-payment as important. He also urged that liability reforms be part of any new package.
The Treasury has proposed raising deductibles and co-payments and hiking the amount of a triggering event to $500 million.
“The issue is getting that balance right,” Snow said in his opening remarks, referring to how much role the government should play versus private insurers and reinsurers.
“Nobody here is talking about ending the backstop. What I’m talking about is revamping to give private industry more room to operate,” Snow told Rep. Sue Kelly (R-N.Y.) at one point. “This is an effort to get to the middle of the road.”
In opening the hearing, Oxley indicated the committee “has a good idea what needs to be done,” although he said he would not pre-judge the final provisions of any terrorism insurance bill.
Several committee members suggested the $500 million trigger was too high but there appeared to be a consensus that a final proposal will include a shift in responsibility to the private sector as the Administration has urged.
Rep. Richard Baker (R-La.) stressed the need to protect taxpayers and provide for recoupment from insurers of any future payments made under a terrorism insurance program. The current TRIA law gives the Treasury authority to seek recoupment but does not require repayment by the industry.
“Government should be a bridge but not a guarantor of profit,” Baker said.
Democrats on the panel stressed the importance of having a program in place for the sake of the economy.
“The main beneficiaries of this are not the insurance companies but the insureds. Insurance companies will find something else to do,” said Barney Frank, (D-Mass.). He pointed to commercial mortgage lenders, real estate interests, construction firms and pension funds as among the beneficiaries.
Citing the Treasury’s own report that relapse of TRIA would lead to less insurance availability and higher prices, Frank said it is not wise for government to let that happen. “We have to act quickly.”
Rep. Kelly came out strongly in favor of TRIA and criticized Snow’s report. She said that her committee has heard from many of the same groups and interests that Snow heard from and that “none of them agree with the conclusions of the Treasury report.”
She maintained that an insurance backstop is important for the entire nation’s economy and that it was the proper role of government to serve as a backstop now as it has done in the past.
“Why should we treat this war on terror any differently than past wars?” she asked.
Rep. Paul Kandorski (D-Pa.) stressed the need for speedy resolution of the issue. “Time is of the essence,” he said, reminding this fellow committee members that there are only six weeks left in the current session.
Kandorski also warned that if the Administration insisted on including tort reform as part of any TRIA renewal, it would kill the plan. “That would not be smart,” he advised.
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