The federal Terrorism Risk Insurance Revision and Extension Act moved out of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises this week and on to the full House Financial Services Committee.
The measure (H.R. 2761) passed by a vote of 26 to 17. According to Pennsylvania Congressman Paul E. Kanjorski, the subcommittee chairman, the bill approved by the subcommittee: Extends TRIA for 10 years; eliminates the distinction between foreign and domestic terrorism; lowers the program’s event triggers; adds group life insurance to the program; creates a blue-ribbon commission to develop long-term recommendations; and improves coverage for nuclear, biological, chemical, and radiological terrorism events.
The full House Financial Services Committee is expected to take up the legislation next week.
The subcommittee approved an amendment by Rep. Richard Baker (R-La.) that lowers the event trigger for the federal government backstop from $100 million to $5 million in the event of a subsequent terrorist attack. The amendment was strongly supported by insurer trade groups.
“A lower event trigger would help more insurers offer terrorism risk insurance, which would provide greater competition, more choices and wider availability,” said Ben McKay, senior vice president, federal government relations for the Property Casualty Insurers Association of America, in a statement release by PCI. “This would lead to greater take-up rates and more coverage, thereby helping protect our economy in the event of a new terrorist attack.”
In an announcement commending the subcommittee for moving the legislation forward, Carl Parks, senior vice president for government affairs for the National Association of Mutual Insurance Companies (NAMIC), said the group is “especially pleased that the members have lowered the event trigger level for the federal government’s involvement in terrorism, from $100 million to as low as $5 million.” Parks said that the reduction in the event trigger will allow “more small- and medium-sized insurance companies to participate in the program and increase the availability of terrorism insurance throughout the nation.”
One element of the legislation that has concerned insurers is the requirement that companies offering terrorism insurance must also offer coverage for nuclear, biological, chemical and radiological (NCBR) attacks. The new version of the bill delays implementation of that requirement and phases in lower deductibles for such coverage.
“NBCR raises far more concerns than does coverage for conventional terrorist attacks, ones that NAMIC continues to believe would be best considered through the creation of a commission to study the implications of an attack using NBCR weapons and the specifics of how best the nation can address the massive harm that such an attack would cause,” Parks said.
He also noted that the “bill still contains some features that would be burdensome for small- and medium-sized insurance companies.”
Leigh Ann Pusey, COO and senior vice president for Government Affairs for the American Insurance Association, urged federal lawmakers to extend TRIA “as quickly as possible.” Pusey added that the federal terrorism backstop “must remain a vital component of our economic security and well-being for the foreseeable future.” She said the AIA is pleased the subcommittee recognized the need for a long-term program and included mechanisms that addressed a NBCR attack.
More information on the Terrorism Risk Insurance Revision and Extension Act of 2007 can be found on the House Committee on Financial Services Web site, http://www.house.gov/apps/list/speech/financialsvcs_dem/mu071907.shtml.
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