The U.S. Senate voted overwhelmingly to reauthorize the federal terrorism reinsurance program that had been allowed to lapse on Dec. 31, a day after the House took similar action. President Barack Obama is widely expected to sign the bill – H. R. 26 – into law.
Senators on Jan. 8 renewed the Terrorism Risk Insurance Act, or TRIA, 93-4 in favor, a day after the House of Representatives voted 416-5 to renew it for six years. Insurance industry insiders were pleased with a vote that comes after more than a year of lobbying for TRIA’s renewal, and a brief expiration of the law on Dec. 31.
“Congress’ timely reauthorization of TRIA will preserve a well-functioning private terrorism insurance marketplace,” said Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), after the Senate vote.
Charles Chamness, president and CEO of the National Association of Mutual Insurance Companies, said he was glad for the quick, bipartisan support to finally renew TRIA.
“Members of Congress from both sides of the aisle have consistently voiced strong support for maintaining the TRIA program, as we saw from the overwhelming vote totals,” Chamness said. “It was unfortunate that the program lapsed; however, we appreciate that the new Congress saw the need to act with all deliberate speed and cleared a bill in its very first week. We commend the leadership demonstrated here, and we hope the president will move swiftly to sign the bill into law.”
The last session of the Senate in 2014 let the program expire on Dec. 31, after Senator Tom Coburn, an Oklahoma Republican who has since retired, raised concerns over a plan to set up a regulator to supervise insurance agents and brokers.
In addition to the terrorism insurance extension, the bill includes a provision to amend the Dodd-Frank Act to exempt agricultural and energy companies from having to post collateral for swaps traded directly with banks. During today’s Senate consideration, Sen. Elizabeth Warren, D. Mass., offered an amendment to strip the Dodd-Frank language from the TRIA bill but her amendment failed to get the 60 votes necessary, with only 31 senators backing it.
The TRIA legislation also includes the National Association of Registered Agents and Brokers (NARAB II) provision intended to streamline insurance producer licensing that Sen. Coburn opposed last year.
Also, the bill has a provision requiring that the Federal Reserve have at least one community banker among its governors.
Only five members in the House, all Republicans, voted against the extension of TRIA. They were Reps. Justin Amash (Michigan), Walter Jones (North Carolina), Thomas Massie (Kentucky), Tom McClintock (California) and James Sensenbrenner (Wisconsin). In the Senate, only four senators voted against the bill: Sens. Maria Cantwell, R. Wash; Marco Rubio, R.-Fla.; Bernie Sanders, I.-Vt.; and Elizabeth Warren, D.-Mass.
Congress first passed TRIA after the terrorist attacks of Sept. 11, 2001, as a way to encourage insurers to provide coverage on New York City buildings.
In addition to reauthorizing the TRIA program for six years, the bill raises the trigger amount needed in total losses before the TRIA program kicks in from the current $100 million to $200 million, over five years, beginning in calendar year 2016. Also over five years, starting Jan. 1, 2016, the mandatory recoupment rises from $27.5 billion to $37.5 billion, increasing by $2 billion each year. For all events, the bill raises the private industry recoupment total from the current 133 percent of covered losses to 140 percent of covered losses.
The TRIA renewal has been sought by the insurance, real estate and financial industries.
The Financial Services Roundtable (FSR) was among many groups pleased with the vote today. “We applaud a strong collaborative effort by Congress to pass this bipartisan legislation critical to taxpayers and our national economy,” said FSR President and CEO Tim Pawlenty. “We hope this paves the way for more bipartisan work in Congress and that President Obama will sign the bill quickly into law.”
Bob Rusbuldt, president and CEO of the Independent Insurance Agents and Brokers of America, said his association is “proud that all our hard work on TRIA and NARAB II has come to fruition and will benefit thousands of small businesses and insurance consumers across the country.”
He added that “long awaited reform on non-resident licensing for agents is finally coming.”
*A version of this story appeared in our sister publication Insurance Journal.