The House of Representatives on Monday passed a bill reauthorizing the federal terrorism reinsurance program by a vote of 385-22.
The vote came on the Terrorism Risk Insurance Program Reauthorization Act of 2019 (H.R. 4634), a bill introduced by Rep. Maxine Waters (D-Calif.), chairwoman of the House Financial Services Committee, that provides for a seven-year reauthorization of the Terrorism Risk Insurance Act (TRIA).
The backstop program for terrorism risks is currently due to expire on Dec. 31, 2020.
The original Terrorism Risk Insurance Act was enacted in the aftermath of the tragic September 11 terrorist attacks, which resulted in the largest insured losses on record from a non-natural event. Terrorism risk insurance became difficult for businesses to obtain or extremely expensive, complicating the recovery.
Since its initial enactment after the September 11, 2001 terrorist attack, TRIP has undergone additional reauthorizations in 2005, 2007 and 2015, with reforms that have increased private sector involvement.
In addition to providing for a seven-year reauthorization period, the bill would also require a government report on cyber terrorism risks and require biennial Treasury reporting that includes disaggregated data on places of worship.
This bill is supported by more than 300 organizations including the American Property Casualty Insurance Association, the Reinsurance Association of America, the U.S. Chamber of Commerce, and the American Bankers Association.
“By passing an extension of the Terrorism Risk Insurance Act, the House has made clear that the U.S. is committed to doing what is needed to persevere in the face of the threat of terrorism,” said Jimi Grande, senior vice president of government affairs for the National Association of Mutual Insurance Companies said. “NAMIC applauds the House for coming together to show its overwhelming support for TRIA and protecting the U.S. economy.”
The Senate Banking Committee is scheduled to markup similar legislation (S.2877) on Wednesday.
“Following the bipartisan passage out of the House of Representatives, the Big ‘I’ urges the U.S. Senate to pass this legislation well in advance of the program’s scheduled expiration,” says Wyatt Stewart, Big “I” senior director, federal government affairs. “This legislation is vitally important to maintaining the strength of the commercial property-casualty insurance market and would provide much-needed stability to the U.S economy.”
Not everyone totally backs renewal of TRIA. The Consumer Federation of America (CFA) maintains that the program is not needed in its current form.
“We believe the program is no longer needed, and this public subsidy of the overcapitalized insurance industry should be wound down,” said J. Robert Hunter, CFA’s director of Insurance and a former Texas and federal insurance regulator “If Congress wants to extend TRIA, it should no longer be as a corporate welfare program, instead, it should require insurance companies to pay a fair, actuarially sound premium for any federal backup of private coverages that Congress authorizes.”
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