Best’s News & Research Service - November 20, 2019 02:31 PM (EST)
Senate Banking Committee Adopts Terrorism Risk Insurance Extension
WASHINGTON //BestWire// - A U.S. Senate committee unanimously approved a long-term, seven-year extension of the Terrorism Risk Insurance Program, moving one step closer to full reauthorization of the government’s financial backstop well before it is to expire next year.
On a voice vote, the Senate Banking, Housing and Urban Affairs Committee passed S. 2877, the Terrorism Risk Insurance Program Reauthorization Act of 2019. The Terrorism Risk Insurance Act authorization expires Dec. 31, 2020.
“The communities, businesses, and the support networks that we rely on after violent tragedies depend on affordable terrorism insurance. We need to be there for our communities so they can be there for us,” U.S. Sen. Sherrod Brown, D-Ohio, panel ranking member, said during the debate.
Earlier this week, the U.S. House overwhelmingly approved a long-term, seven-year TRIA extension, H.R. 4634. Both the House bill and the Senate bill make minimal changes to the program (Best’s News Service, Nov. 19, 2019).
Jimi Grande, senior vice president of government affairs for National Association of Mutual Insurance Companies, urged swift action by the full Senate.
“Today’s unanimous passage of an identical bill out of the Senate Banking Committee demonstrates that there is little daylight between the two chambers or between the two sides of the aisle,” Grande said in a statement. “There is no reason Congress shouldn’t be able to get a bill to the president’s desk by the end of the year.”
The National Association of Professional Insurance Agents, the American Property Casualty Insurance Association and the Independent Insurance Agents and Brokers of America also approved of the committee’s vote.
The program has undergone three previous reauthorizations — in 2005, 2007 and 2015 — and the threat of terrorism is still “ever-present,” IIABA said in a statement.
The bill should go to the Senate floor as soon as possible, said Jon Gentile, PIA National vice president of government relations. “Bipartisan agreement on legislation is rare in Congress these days, and this opportunity to get TRIA over the finish line should not be squandered,” he said.
An early extension — well before next year’s deadline — will help avoid uncertainty in both the industry and across the broader economy, said Nat Wienecke, APCIA senior vice president, federal government relations.
The committee vote, “sends a clear message of the critical role TRIA plays in stabilizing the economy and the overwhelming call to get it done 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)