Best’s News & Research Service - October 28, 2019 11:52 AM (EDT)
US House Panel to Take Up Terrorism Risk Insurance Extension on Oct. 29
WASHINGTON //BestWire// - The U.S. House Financial Services Committee on Oct. 29 is to mark up a long-term, seven-year extension of the Terrorism Risk Insurance Program, the government’s financial backstop that has provided market certainty since the 9/11 attacks.
The committee will consider H.R. 4634, the Terrorism Risk Insurance Program Reauthorization Act of 2019, sponsored by U.S. Rep. Maxine Waters, D-Calif., committee chair.
Insurance representatives have urged lawmakers to quickly approve a long-term TRIA extension.
“We commend Chairwoman Waters, ranking member (Patrick) McHenry (R-N.C.) and the House Financial Services Committee for making TRIA a top priority,” said Nat Wienecke, senior vice president, federal government relations at the American Property Casualty Insurance Association.
“APCIA and our members strongly support H.R. 4634, the Terrorism Risk Insurance Program Reauthorization Act of 2019,” he said in a statement. “This bipartisan bill ensures that the program remains in place, without disrupting the marketplace.”
The current TRIA authorization expires Dec. 31, 2020.
The federal program acts as a financial backstop for the property/casualty industry to help drive down the cost of terrorism coverage. Before the backstop kicks in, individual events must be certified as acts of terror by the Secretary of State, the Treasury Secretary and the U.S. Attorney General.
For federal funding to kick in, the country would have to exceed losses of $180 million in a given year rather than losses from a single event. The aggregate trigger increases to $200 million next year, according to an analysis by the Congressional Research Service. Once the federal backstop kicks in, insurers would still be required to cover 20% of all claims. The other 80% would be covered by the federal government and paid back over time.
AM Best this year compiled an internal list of rated insurers with terrorism exposure and asked some with certain exposures or Terrorism Risk Insurance Program Reauthorization Act reliance to present detailed contingency plans on how they will mitigate their exposure if the program lapses (Best’s News Service, Oct. 16, 2019).
AM Best Senior Financial Analyst Edward Zonenberg, told AM BestTV on Oct. 16 he was impressed by the professionalism and prudent risk management that most of the companies treated this potential exposure.
(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)