Insurance industry lobbyists are confident there is enough backing in Congress for renewal of the federal terrorism reinsurance program and enough support to override a threatened presidential veto if necessary.
The current reinsurance program expires at the end of the year. A bill that would extend the reinsurance backstop program for 15 years and expand its terms and coverages passed the House on Wednesday by a vote of 312-110. That’s enough of a margin to override a veto.
The bill — H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA) — now goes to the Senate, where skeptical Republicans have more clout and where the legislation’s fate is less certain. The Senate could alter the House bill to address some of the concerns raised by the White House as well as some of those raised by the insurance industry.
“Obviously, we can’t know for sure what members, particularly Republicans, will ultimately do if the president vetoes it, but if Wednesday’s total holds up, the bill’s supporters would have more than enough votes to override him in the House. What the Senate might do is a matter of pure speculation at this point,” pointed out Cliston Brown, director of federal public affairs for the Property Casualty Insurers Association of America (PCI).
Despite that caution, overall the industry is expressing confidence that some form of a federal reinsurance program will be in place next year.
Agent groups supporting the measure predicted a veto would be avoided.
“PIA believes that there is enough support in Congress to override a threatened Presidential veto. In addition, we are not convinced that the President will veto the bill that will emerge from a House-Senate conference, which will probably address at least some of the Administration’s stated concerns,” commented Patricia A. Borowski, senior vice president, for the National Association of Professional Insurance Agents (PIA).
Borowski thinks President Bush may not want to go against the “broad bipartisan support” that the bill has garnered thus far. “PIA’s efforts will now concentrate on making the final bill veto-proof,” she added.
Jason T. Spence, assistant vice president, federal government affairs, the Independent Insurance Agents & Brokers of America, agrees Bush will eventually have a bill he can sign. “The Big ‘I’ is optimistic that, as this issue continues to make its way through the legislative process, Congress will be able to present a bill that the President will sign before this critical program expires at the end of the year,” Spence offered.
Some in the industry wouldn’t mind if the Senate amended the House bill a bit.
The National Association of Mutual Insurance Companies (NAMIC), along with PCI, opposes the provision that mandates all insurers make available coverage for nuclear, biological, chemical and radiological (NBCR) attacks, and many of the groups’ member companies are hopeful that this will be removed as the bill advances through the Senate.
“We remain concerned about the NBCR ‘make-available’ provision and will work with members of the Senate to address that issue,” said Marliss Browder, NAMIC’s senior federal affairs director.
Despite the NBCR concern, Browder said NAMIC is “optimistic that Congress will ultimately produce legislation that extends TRIA in a way that addresses the concerns of all property/casualty insurers and has the blessing of President Bush.”
The Bush Administration also opposes the “make-available” mandate for NBCR coverage, claiming that it “could have a negative impact on the provision of terrorism risk insurance coverage for non-NBCR acts of terrorism,” in the words of the Office of Management and Budget (OMB). The OMB analyzed the legislation for the White House and issued the veto warning.
OMB also objects to the NBCR provisions because it says they increase the government’s share of private insurance losses from NBCR events by reducing insurance industry deductibles and reducing co-payments for NBCR losses.
The OMB has set forth three conditions it says must be met for the White House to accept a terrorism reinsurance prorgam extension: the program should be temporary and short-term; there should be no expansion of the program; and private sector retentions should be increased.
Against the wishes of the White House, H.R. 2716 would extend the program for 15 years and add coverage for group life insurance and domestic terrorism.
Sen. Chris Dodd, D-Conn., chair of the Senate Banking Committee, is sponsoring the legislation in that body and is a strong supporter of the renewal.
“This is a tremendously important issue, and one that should – and must – be a top priority. We must ensure that our nation is financially prepared and protected from the threat of a future terrorist attack. A key element of that preparation needs to be protecting American jobs, workers, and businesses to ensure that our economy continues to function. Our nation’s security and prosperity depend upon it. I intend to continue to work as chairman of the Senate Banking Committee to ensure that TRIA’s proven protections are extended,” Dodd said in a press announcement.
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