Update on TRIA Renewal Legislation | Wolters Kluwer Financial Services
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  • Update on TRIA Renewal Legislation

    Sheila Coolidge

    by Sheila Coolidge, Senior Insurance Compliance Analyst, Insurance Compliance Solutions

    Published September 08, 2014

    Since I last wrote on Congressional efforts to pass a terrorism insurance renewal bill last March, the U.S. House of Representatives and Senate have both approved terrorism insurance renewal bills. Just before the summer recess, the Senate approved the Terrorism Risk Insurance Program Reauthorization Act of 2014, by a 93-4 vote.  The legislation, co-authored by Senators Jack Reed (D-RI), Charles E. Schumer (D-NY), Dean Heller (R-NV), and Mark Kirk (R-IL), reauthorizes and extends the terrorism insurance program established under the Terrorism Risk Insurance Act (TRIA) of 2002, which is set to expire at the end of 2014.

    The House (H.R. 4871) and Senate (S. 2244) bills differ in several ways. The Senate version provides a seven year extension of TRIA until December 31, 2021, and gradually raises the insurer co-payment from 15% to 20% over five years. The legislation retains the current $100 million loss amount that would trigger government reimbursement and transitions the mandatory recoupment threshold from $27.5 billion to $37.5 billion over five years and includes provisions creating a national registry of insurance producers, the National Association of Registered Agents and Brokers (NARAB II). The House version also contains the insurance producers national registry provision but would renew TRIA for only five years and shift more of the costs of the program to the private insurance market. It also creates a separate, more limited loss amount triggering government reimbursement for terrorism involving nuclear, biological, chemical, or radiological (NBCR) attacks.

    The Obama administration and most industry groups favor of the Senate version, which passed with strong bipartisan support. Critics of TRIA renewal legislation contend that it is unnecessary and an example of the federal government overreaching into the private sector. Rather than argue in favor of no extension of the current TRIA law, however, most TRIA critics appear to favor passage of a version of the House Bill, which focuses on limiting government loss exposure in the event of a terrorist attack.

    As Congress returns to work this week, the insurance industry will be closely monitoring the progress of S. 2244 and H.R. 4871. Since underwriters are now drafting 2015 renewals, it is crucial that legislators move quickly to finalize this important legislation and permit insurers adequate time to implement updated terrorism coverage provisions.

    Editor’s Recommendation: Stay up to date on Federal and state legislation with NILS INsource.

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