Best’s News & Research Service - October 29, 2019 04:28 PM (EDT)
US House Panel Approves Long-Term Terrorism Risk Insurance Extension
WASHINGTON //BestWire// - The U.S. House Financial Services Committee approved a long-term, seven-year extension of the Terrorism Risk Insurance Program, moving to reauthorize the government’s financial backstop well before it is to expire next year.
On a voice vote, the committee approved H.R. 4634, the Terrorism Risk Insurance Program Reauthorization Act of 2019, sponsored by U.S. Rep. Maxine Waters, D-Calif., committee chair. It was supported by both Republican and Democratic members of the committee.
Insurance representatives reacted positively to the vote.
“Today’s bipartisan vote is a positive step forward to ensure TRIA (Terrorism Risk Insurance Act) is in place without disruption to the marketplace and consumers,” said Nat Wienecke, senior vice president, federal government relations at the American Property Casualty Insurance Association. “TRIA provides the vital economic protections against acts of terrorism that businesses of all sizes rely upon.
“The risk of terrorism is still very real, and the TRIA program is still needed to promote economic stability both before and after an attack,” Wienecke said. “We urge the full House to take up and pass this bill quickly.”
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 (Best’s News Service, Oct. 28, 2019).
Rep. Carolyn Maloney, D-N.Y., said the bill is the most important one in Congress.
“After 9/11 insurers realized they could not accurately model for terrorism risk,” she said. “Insurers don’t have the information they need to accurately predict where a terrorist attack is most likely to happen.”
(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)