Best’s News & Research Service - November 19, 2019 02:53 PM (EST)
US House Approves Terrorism Risk Insurance Extension, Rewrite Moves to Senate
WASHINGTON //BestWire// - The U.S. House has overwhelmingly approved a long-term, seven-year extension of the Terrorism Risk Insurance Program, sending reauthorization to the Senate in an effort to renew the government’s financial backstop well before it is to expire next year.
On a vote of 385-22, the House passed the Terrorism Risk Insurance Program Reauthorization Act of 2019 (H.R. 4634), introduced by U.S. Rep. Maxine Waters, D-Calif. A companion measure, S. 2877, is to be considered later this week by the Senate Banking Housing and Urban Affairs Committee; the Terrorism Risk Insurance Act authorization expires Dec. 31, 2020.
The House bill is supported by a broad coalition of more than 300 organizations, including the American Property Casualty Insurance Association, Independent Insurance Agents and Brokers of America, the National Association of Professional Insurance Agents and the National Association of Mutual Insurance Companies.
It is important to get the extension approved well before next year’s deadline, said Nat Wienecke, APCIA senior vice president, federal government relations.
“We are encouraging all members of Congress to do everything they can to try to get TRIA done this year,” Wienecke told Best’s News Service.
“Insurers are already negotiating contracts that extend past TRIA’s expiration and those contracts have what are termed ‘conditional exclusions,’ which means that if the program weren’t reauthorized that the policyholder would have no coverage,” he said.
“If they don’t get TRIA done this year, that creates uncertainty, for the very businesses that need certainty. Insurers are in the certainty business,” he said. “For a bill that’s bipartisan and noncontroversial, if Congress just puts a shoulder against the wheel, they can take that uncertainty out of the economy.”
Charles Symington, IIABA senior vice president of external, industry and government affairs, agreed it is important to extend the program on a long-term basis long before the scheduled expiration.
PIA strongly supports the bill, which makes only minimal changes to the program, said Jon Gentile, PIA national vice president of government relations. “The House passage of TRIA over a year in advance of its expiration is a breath of fresh air and will be welcomed by policyholders and the market,” said Gentile.
Jimi Grande, senior vice president of government affairs for NAMIC, also applauded the House vote. Congress established the program in the wake of the 9/11 attacks to ensure there was a stable, functioning private market for terrorism risk insurance, he said.
“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 Grande. “In these partisan times it is increasingly difficult for Congress to pass even the most noncontroversial items, and this vote should send a clear message across the Capitol.”
“There’s absolutely no reason for the Senate to wait to take up this important legislation, and we urge the chamber to make a top priority of passing a TRIA extension and provide that much-needed certainty for the economy before the end of this year,” he said.
The federal program acts as a financial backstop for the property/casualty industry to help drive down the cost of terrorism coverage. Before the backstop kicks in, individual events must be certified as acts of terror by the Secretary of State, the Treasury Secretary and the U.S. Attorney General.
For federal funding to kick in, the country would have to exceed losses of $180 million in a given year rather than losses from a single event. The aggregate trigger increases to $200 million next year, according to an analysis by the Congressional Research Service. Once the federal backstop kicks in, insurers would still be required to cover 20% of all claims. The other 80% would be covered by the federal government and paid back over time (Best’s News Service, Oct. 29, 2019).
(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)