The Republican House Financial Services Committee (HFSC) voted 32-27 in a party line split Friday morning to renew the Terrorism Risk Insurance Program (TRIA) for five years, sending the measure to the House floor and perhaps a spirited debate there.

The industry is seeking passage before the August recess.

The Senate Banking Committee passed its own legislation 22-0 on June 3.

The TRIA Reauthorization Act of 2014, H.R. 4871, increases the trigger for the government backstop to $500 million from the current $100 million, raises the insurer copay to 20 percent, and bifurcates the treatment of conventional terrorist attacks from so-called NBCR attacks (nuclear, biological, chemical and radiological attacks).

The bill also picks up the legislation creating the long-sought producer clearinghouse for multistate licensing of agents and brokers, National Association of Registered Agents and Brokers (NARAB II), which is championed by NAIC and the Federal Insurance Office (FIO) as well as by commercial brokers.

Also voted out of committee along party line votes were bills to place a six-month moratorium on the authority of the Financial Stability Oversight Council (FSOC) to make financial stability determinations. FSOC is now looking at asset managers and money market providers as well as figuring out how to dispatch MetLife from Stage 3 of its review as a nonbank systemically important financial institution (SIFI.) MetLife is already designated as a global systemically important insurer by global supervisors.

Lawmakers on the HFSC, feeling stymied by SIFI determinations made behind closed doors, also voted to subject the FSOC to transparency and congressional oversight of sorts, by making the FSOC subject to the Sunshine Act, federal advisory committee laws, and by allowing relevant members of Congress and boards of represented agencies into closed FSOC meetings.

The next such meeting is on June 24.

During debate Thursday in committee, the TRIA bill’s proposed higher trigger amount was a divisive line between those who did not fully support the legislation and those who are urging the industry to shoulder ever more of the costs of a future terrorist attack.

The higher amount might be winnowed down in a future conference committee, but the division in the ranks means the bill won’t be fast-tracked or go on the suspension calendar.

Rep. Carolyn Maloney, D-N.Y., led the Democrats in opposition, stating that changes in the trigger and the differentiation between style of terrorist attacks “would drive small- and medium-sized insurers out of the market entirely—which would actually reduce the amount of terrorism insurance available to businesses.”

“The insurers that remained in the market would be forced to jack up rates to levels that are unaffordable to Main Street businesses across the country,” she stated.

“This bill will jeopardize jobs…This bill picks winners and losers,” said Ranking Member of the HFSC Maxine Waters, D-Calif. She argued it arbitrarily bifurcates types of terrorism and also allows smaller insurers to opt out of providing coverage. “This bill punishes small regional and niche insurers,” said Waters, calling the legislation “short-sighted” and “bad public policy.”

Waters’ amendment to extend TRIA by 10 years failed 27-31, as a couple of members were not there to vote.

Even Republicans who support the bill said they have strong problems with it. Peter King, R-N.Y., said the renewal seemed to be a solution in search of a problem and that he would not vote for passage of this bill on the House floor but would move it out of committee.

Randy Hultgren, R-Ill., also said the provisions as-is would hurt small insurers because the trigger levels are “extraordinarily high.” Many of his home-state insurers would be priced out of the market,” he said, adding that the measure would subject those insurers to “disastrous ratings downgrades.”

Rep. David Scott, D-Ga., went so far as to suggest the nation could “be brought to its knees” with a higher trigger amount.

There are terrorists out there “who are watching our every move. And if they saw if we are foolish enough and irresponsible enough to pass this bill that gets rid of our backstop, it will keep us on our knees,” he said, adding that is what the terrorists want.

“We are being watched, and we are being targeted, and if we pass this legislation, it will send a resounding message” to terrorists who can then increase their impact because the U.S. has decreased its ability to regain its footing and rebuild, he charged.

But this bill does not eliminate TRIA, argued bill sponsor Randy Neugebauer, R-Texas. Neugebauer, also chair of the HFSC Housing and Insurance Subcommittee, said the $500 million was worked down from $1 billion.

Committee Chairman Jeb Hensarling, R-Texas, pointed out that there have been a number of changes in TRIA over the years. In the original act there was not a trigger level, and the trigger in subsequent reauthorizations climbed from $50 million to $100 million.

The deductible has risen to 20 percent from 7 percent in increments over the years. Copays and recoupment amounts have also grown as risk models themselves have advanced. He raised the idea of not wanting to keep giving out subsidies to those unwilling to give them up. The recurring theme of the TRIA program ending, Hensarling said, is not true.

King of New York acknowledged that there have been changes in TRIA over the past 12 years, “but none as radical as going from $100 million to $500 million” triggers.

Insurance groups said they will continue working with the committee and with Congress to pass TRIA reauthorization legislation. The American Insurance Association (AIA) said it would “address remaining concerns such as bifurcation and increasing the program trigger that could negatively impact capacity.”

Insurers expressed hope that TRIA will be reauthorized in 2014 with strong bi-partisan support, meaning a lot of the sticky wickets in the House bill will be dealt with.

The National Association of Mutual Insurance Companies (NAMIC) is concerned that the bill’s high trigger will reduce competition and create a greater concentration of risk as small- and medium-sized regional or single-state insurers are driven out of the terrorism insurance market.

The Property Casualty Insurers Association of America (PCI) also spoke of trying to further improve TRIA reauthorization legislation with the hope of enactment before the August recess.

PCI and the Council of Insurance Agents & Brokers said they supported the NARAB II adoption by the committee as part of the House TRIA Reform Act. “Relief from the extraordinary burdens of nonresident interstate licensure has been long in coming, and we think we’re now very close to achieving it,” said Ken Crerar, CEO of The Council.

“As for TRIA reform, we agree with those who believe the government shouldn’t be in the business of providing insurance coverage that private industry can provide. Finding the right mix of deductibles, copays and triggers is tricky and sensitive.

“There will inevitably be back-and-forth actions in the coming weeks in both chambers, and we are encouraged that Congress will ultimately act to avoid the expiration of the act,” Crerar stated.