Congress officially has a new bill to reauthorize the federal terrorism reinsurance program.
Two Democrats from Massachusetts — U.S. Rep. Mike Capuano and the Chairman of the House Financial Services Committee Barney Frank — have introduced H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA).
The bill extends the Terrorism Risk Insurance Act (TRIA) for 10 years and, its supporters contend, will spur the development of a private market for terrorism risk insurance.
The Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA) includes provisions to:
Extend TRIA for 10 years with current co-payments and deductibles for conventional terrorism acts;
Expand TRIA’s “make available” requirement to include NBCR coverage;
Change TRIA’s definition of terrorism to include acts of domestic terrorism;
Set the program trigger at $50 million;
Add group life insurance to the lines of insurance for which terrorism coverage must bemade available;
Decrease deductibles and triggers for areas previously impacted by a significant terroristattack; and,
Continue to require studies of the development of a private market for terrorism riskinsurance.
After the 9/11 terrorist attacks, many insurance companies excluded terrorism events from their insurance policies. As a result, Congress in 2002 passed TRIA, which created a federal backstop to protect against terrorism related losses. In 2005, the measure was extended for two years and currently is set to expire at the end of 2007.
Joining Rep. Capuano and Chairman Frank in co-sponsoring TRIREA are Reps. Gary Ackerman, Joseph Crowley, Paul Hodes, Steve Israel, Peter King, Carolyn McCarthy, Carolyn Maloney, Gregory Meeks, Dan Boren, Emmanuel Cleaver, Lincoln Davis, Al Green, Luis V. Gutierrez, Steven Lynch, Tim Mahoney, David Scott, Christopher Shays, Brad Sherman, Albio Sires, Melvin Watt and Robert Wexler.
Congressman Paul E. Kanjorski, chairman of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, has scheduled a hearing to discuss the bill on Thursday, June 21 at 10:00 a.m.
“TRIA has helped make terrorism insurance available and affordable to businesses, particularly those in our major urban areas. Improving and extending the program will help stabilize the economy, as well as help protect American workers and our communities against possible terrorist attacks,” stated Congressman Capuano.
“We need to keep in perspective that this bill is necessary for economic development and to protect property owners, building tenants, developers and people who work or live in high risk areas,” said Frank. “We have made significant improvements in this legislation, and we believe we have struck the right balance in providing assurances for business and workers in urban areas and encouraging the creation of a private market.”
While the TRIA program has been credited with keeping terrorism insurance affordable, the President’s Working Group on Financial Markets last year concluded that a private market for terrorism insurance is not yet commercially viable, especially with regard to insurance against nuclear biological chemical and radiological (NBCR) acts of terrorism.
Source: House Financial Services Committee
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