In a 93-4 vote, the Senate passed the Terrorism Risk Insurance Program Reauthorization Act of 2014 (S. 2244 ) that extends the federal reinsurance program for seven years.
Congress first passed TRIA in 2002 in the wake of the Sept. 11 terrorist attacks as a temporary program. TRIA was designed to protect the commercial insurance market and its customers by requiring insurers to offer terrorism coverage in exchange for the government stepping in with reimbursement if the industry's losses exceed $100 million after a single terrorist attack.
TRIA has been twice reauthorized with bipartisan congressional support but it will expire at the end of this year unless the House and Senate can agree on renewing it.
The insurance, banking and construction industries and other proponents have argued that TRIA provides important stability in the terrorism insurance market and that without it private insurers would find it difficult, if not impossible, to provide the coverage businesses need.
"Agents and brokers must have the ability to provide terrorism protection to their customers in the event of another unthinkable attack on American soil," said Bob Rusbuldt, Big "I" president and CEO. "The current TRIA program has worked well to ensure the availability of this coverage and it is imperative that a lapse be avoided."
Critics of TRIA, including taxpayer, consumer and conservative groups, maintain that TRIA is unnecessary and an example of government involving itself where it should not in the private sector. They argue that private insurers, despite their denials, are capable of providing terrorism without a government backstop. They also point out that TRIA was initially intended as a temporary program.
Rather than eliminate TRIA, opponents have largely sought to limit TRIA and reduce the exposure of the government to losses in the event of a terrorist attack. The House bill (H.R. 4871) would extend TRIA for five years, increase the insurer co-pay to 20 percent, and create a new program bifurcation for nuclear, biological, chemical, or radiological (NBCR) type of attacks.
The House legislation would increase from $100 million to $500 million the loss amount from a terrorist attack using conventional weapons that would trigger government reimbursement. The House bill, however, keeps the trigger at $100 million for a nuclear, biological, chemical or radiological attack. The Senate version keeps the trigger at $100 million regardless of the type of terrorist attack.
(Source the Insurance Journal)