The U.S. House of Representatives has passed an extension to the Terrorism Risk Insurance Act (TRIA) by a vote of 360 to 53 in a form closer to what the Bush Administration and the Senate would support than to an original House measure.
The legislation will extend TRIA for seven years and, its backers say, help spur the further development of a private market for terrorism risk insurance.
TRIA is now set to expire at the end of 2007 unless Congress acts again to extend the law. The measure will now be sent to President Bush for his signature and it is expected that he will sign the bill into law later this week.
The House legislation is the Senate amendment to HR 2761 (original House TRIA bill) and includes the following provisions:
* Domestic Acts of Terrorism: Incorporates domestic acts of terrorism;
* Duration: Extends TRIA for 7 years;
* Annual Liability Cap: Clarifies the $100 billion cap; requires Treasury to provide notice to Congress and promulgate regulations regarding the cap;
* Recoupment: Accelerates the timing of mandatory recoupment (recovering amounts paid by Treasury up to $27.5 billion); and
* Reports: Requires GAO studies of (1) insurance for nuclear, biological, chemical, and radiological terrorist events and (2) availability and affordability of terrorism insurance in specific markets.
Sen. Chris Dodd, D-Conn., who co-authored the original Terrorism Risk Insurance Act (TRIA) and authored the legislation to reauthorize the measure, commended the House for their approval.
“It will help to protect our nation’s workers and businesses from the risk of terrorism and help to ensure that our economy is able to thrive and create jobs,” said Dodd in a statement. “This is a carefully crafted, strong and balanced bill that the President has said he will sign into law. I want to thank Senator Shelby, Majority Leader Reid, Republican Leader McConnell, Chairman Frank and others who helped make this day a reality.”
The insurance industry has supported extending the federal terrorism insurance backstop, maintaining that the private sector does not have the capacity to provide affordable terrorism risk insurance on its own without the existence of a federal backstop.
“It is unrealistic to expect the U.S. insurance and reinsurance industries to underwrite the scale, size and frequency of future terrorist attacks,” said Frank Nutter, president of the Reinsurance Association of America (RAA).
“The TRIAE program will work well to fill the vacuum in reinsurance capacity for acts of terrorism, will keep premiums paid by policyholders at affordable levels, will provide insurance coverage to support economic activity, and will minimize the need for public disaster assistance should there be future terrorist acts in the United States,” Nutter said.
Reauthorization of this program is essential to the nation’s economic vitality, said Gov. Marc Racicot, president of the American Insurance Association.
“This action is critical to businesses throughout the nation that rely on insurance to protect them from the threat of terrorism,” Racicot noted. “A seven-year extension of this program helps remove the risk, uncertainty and instability in the market and will foster long-term investment and economic growth.”
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