The U.S. House of Representatives has approved a new bill that would extend the Terrorism Risk Insurance Act, or TRIA. This quick vote at the start of the new Congress boosts chances for a swift reauthorization after efforts derailed in December.
The new bill—H.R. 26—passed 416-5. It is identical to one passed by the House on Dec. 10 and would extend the federal terrorism reinsurance program for six years. Congress came close to extending TRIA before it expired on Dec. 31, but now-ex-Sen. Tom Coburn, an Oklahoma Republican who just retired, held up the legislation and renewal efforts died on the Senate floor. (The Senate had taken up the matter again after passing a different TRIA bill several months ago.)
H.R. 26 would extend deductibles over time from $100 million to $200 million and leave participating companies covering more losses alongside the federal government than they do now. As well, insurers’ co-insurance would increase by 1 percent annually from 15 percent now to 20 percent, Standard & Poor’s noted in press commentary about the vote.
TRIA was first approved in the aftermath of the Sept. 11, 2001 terrorist attacks in order to help stabilize the market. It has been extended several times since, and property/casualty and business leaders alike said its end would create market chaos and gum up the economy. More than two-dozen trade groups sent a letter to the House on Jan. 6 urging them to quickly approve a new TRIA bill, which came up for consideration and rapid vote on Jan. 7 under suspension of the rules.
Industry groups applauded the House’s action and urged the Senate to move quickly to approve the House bill.
David Sampson, president and CEO of the Property Casualty Insurers Association of America, said in prepared remarks that “this long-term legislation will minimize market disruptions, maintain the availability and affordability of terrorism insurance for consumers, and protect taxpayers.”
Sampson said PCI also supported the House’s inclusion in the bill of a measure that would enable the multistate licensing of agents and brokers through establishment of the National Association of Registered Agents and Brokers.
“PCI calls on the Senate to act swiftly, pass H.R. 26 and send a final bill to the president’s desk in January,” Sampson said.
Charles Chamness, president and CEO of the National Association of Mutual Insurance Companies, said in a statement that the TRIA vote, even past the original December deadline, will help to create “certainty and security” in the economy.
“The uncertainty created when the program was allowed to lapse at the beginning of this year has already begun to have a chilling effect on businesses and communities across the country,” Chamness said. “We are pleased with the House taking swift and decisive action on TRIA and urge the Senate to move with all deliberate speed to do the same.”
Leigh Ann Pusey, president and CEO of the American Insurance Association, said in a statement that “only a long-term reauthorization of TRIA will restore market certainty and protect our economy against major acts of terrorism.”
Standard & Poor’s, meanwhile, said the proposed TRIA extension is “a formidable step toward more underwriting stability that will lessen our concerns about market disruption.”