The new U.S. House Terrorism Risk Insurance Act extension was voted out of the House Financial Services Committee (HFSC) Friday morning 32-27, with Democrats objecting to many of the provisions increasing the insurance industry exposure, arguing it could lead to job loss issues and concentration of risk.
TRIA Reform Act of 2014, H.R. 4871, legislation to reauthorize the Terrorism Risk Insurance Act (TRIA), will now go to the House floor, and get passes, insurers hope, before the August recess. It is here where insurers and others hope to soften the terms of the HFSC’s version, including the $500 million trigger, the 20% co-pay and the recoupment amounts.
Also attached was the proposed NARAB 2 producer clearinghouse, the darling of the insurance broker community, and two separate bills on the Financial Stability Oversight Council (FSOC), on opening it up to more federal participants or observers and to the Sunshine Act, and another putting a six-month moratorium on any designations. The FSOC bills are separate, and not attached to TRIA, as NARAB 2 is.
An amendment by Democrats to extend the five year TRIA program extension to 10 years was defeated.
NARAB 2 was accepted on a unanimous bipartisan basis as an amendment by Insurance Subcommittee Chairman Randy Neugebauer, R-TX. The FSOC bills also split along party line votes, with Republicans the majority.
“As the debates made clear yesterday, the proper role for the federal government in backstopping terrorism losses is an exceptionally sensitive philosophical debate. While both House and Senate leaders currently feel strongly about their respective views, we view the House committee’s action today to be a positive step toward the ultimate resolution of TRIA extension this year. It could, however, get uglier before it gets nicer,” wrote Joel Wood of the Council of Insurance Agents & Brokers after the vote today.
Jimi Grande, senior vice president of federal and political affairs at the National Association of Mutual Insurance Companies (NAMIC), was more skeptical.
“We are appreciative of the committee’s willingness to work with stakeholders to reauthorize a program that is essential for protecting the U.S. economy from the potentially devastating effects of a catastrophic terrorist attack,” Grande said. “That said, NAMIC has serious concerns about some of the provisions in the House bill that, if not addressed, could severely curtail some companies’ access to the program and significantly disrupt the currently competitive marketplace for terrorism insurance coverage.”
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