House Leader: 120-Day Extension for Federal Terrorism Insurance Possible

By | October 29, 2007

A key House leader says he will push for a 120-day extension of the federal terrorism reinsurance program that expires at year’s end rather than simply accept the Senate bill that is narrower in scope than the House bill.

Rep. Barney Frank, D-Mass., who chairs the House Financial Services Committee that produced the House bill, said if the Senate avoids compromise and takes a “take it or leave it” attitude on the bill, he will counter with legislation to extend the current program for 120 days and deal with the bills’ differences next year.

(A previous version of this story reported that Frank called for a 120-day extension for the federal flood insurance program as well, however, Rep. Frank’s office told Insurance Journal Frank “misspoke about the flood program” and he has corrected his comments to refer to the terrorism program only. The flood program does not expire at year’s end.)

Frank, speaking before the Property Casualty Insurers Association of America in Boston, expressed frustration with the Senate that he says is operating from a “strength of weakness” position by claiming that its bills on flood insurance and terrorism insurance are the best it can do and if the House won’t just go along, then the programs will expire.

“I’m not going to play that game,” Frank told the insurance executives at the PCI annual meeting. “I will not be subjected to these tactics.”

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. Senate leaders, including Sen. Chris Dodd, D-Conn., chair of the Senate Banking Committee, have agreed on a bill to renew TRIA, although without some of the added provisions and for not as long as the House of Representatives wants. The Senate version would renew TRIA for seven years or until 2014, compared to 15 years in the House version.

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 nuclear, biological, chemical and radiological (NBCR) attacks.

The Senate version also does not incorporate group life insurance or 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.

Dodd worked out the Senate version with Sen. Richard Shelby, R-Ala., the ranking Republican on the committee who has in the past opposed TRIA.

Frank stressed his support for the group life and other provisions of the House TRIA bill, although he suggested he would be open to a compromise to extend it for only 10 rather than 15 years.

On other issues, Frank said Congress would begin addressing a catastrophe reinsurance plan next year and that lawmakers remain open to ideas on how best to structure such a program.

He also suggested that the recent tragedy of the California wildfires could renew calls that any federal backstop cover multiple perils.

The issue of giving insurance companies the choice of federal regulation instead of state is not going to move this year, according to the Democrat. Frank stressed that independent insurance agents, who oppose a federal charter, have considerable influence in Congress and “no major change is going to come over the opposition of the agents.”

Was this article valuable?

Here are more articles you may enjoy.