Two pieces of legislation atop many U.S. insurers’ wish-list celebrated success in the Senate June 3 and could find themselves part and parcel of a larger bill in conference if companion legislation moves forward in the House.
The Senate Banking Committee passed the Terrorism Risk Insurance Association’s (TRIA) reauthorization Tuesday 22-0, the first such movement of any TRIA reauthorization legislation this year. The House course of action on TRIA is widely said to be caught up in House Financial Service Committee leadership concerns.
Also Tuesday, the full Senate approved legislation (S. 2270) that would allow the Federal Reserve Board’s flexibility to develop insurance-based capital standards for insurance companies under its supervision.
Basically, the bill would temper the effects of the Dodd-Frank Act’s seemingly watertight Collins Amendment on development of capital standards for systemically important insurers, thrift/ savings & loan holding companies (SLHC’s) and any future insurance company that would or could come under the Fed’s purview.
Although the House has not forged legislation yet on TRIA, it is the centerpiece of any insurance potential lawmaking this year, so many say it could carry along any Dodd-Frank fixes with it once (and whether) it climbs through both chambers of Congress.
Housing and Insurance Subcommittee Chairman Randy Neugebauer, R-Tex., is expected to soon introduce the House`s TRIA reauthorization bill, according to the property casualty insurance lobby. Although a slim reauthorization package has been suggested, and insurers clamor for broader cushions, some compromise action is anticipated, as urgency among insurers grows.
Earlier this year, the Fed temporarily exempted life insurers from bank-centric rules while it explored capital standard options for life insurers. Fed officials have testified or shared that the Collins Amendment, or Section 171, gives them little flexibility to exempt or change life insurers from strict minimum capital standards intended for banks.
S. 2270 is designed to give the Fed the ability to develop insurance-specific standards for insurance companies as it moves forward.
In the House, there is legislation, although it hasn’t gotten the ride it has in the Senate. Gary Miller, R-Calif. and Carolyn McCarthy, D-N.Y., and 51 cosponsors are pushing for H.R. 4510.
The American Council of Life Insurers (ACLI) says rules governing life insurers on all issues must be appropriate for life insurers. “There is broad agreement on this position. The Obama administration, Democrats and Republicans in the House and the Senate, state and federal regulators and private industry all agree that life insurers should not be subject to capital standards more suited for the business of banking,” the ACLI stated yesterday.
Sen. Susan Collins, R-Maine, author of the Collins Amendment, Sen. Sherrod Brown, D-Ohio, and Sen. Mike Johanns, R-Neb., for introduced S. 2270.
Swinging back to TRIA, the American Insurance Association (AIA) says it is confident that TRIA will be reauthorized in 2014 with strong bi-partisan support.”
“The program maximizes private market risk bearing while protecting taxpayers at every step. By placing the financial recovery on the private market in all but the most catastrophic of attacks, TRIA protects the federal government and taxpayers from this potential exposure,” the AIA stated.
For a comprehensive overview of TRIA authorization history, see http://www.fas.org/sgp/crs/terror/R42716.pdf TRIA was reauthorized in 2005 and 2007 after its first authorization in 20002 in response to the Sept. 11, 2001 terrorist acts.
WASHINGTON INSURANCE RIDER 