It will be November before Congress acts on the renewal of the Terrorism Risk Insurance Act (TRIA). If it acts at all.
And the words acts at all are the key to the last sentence and a big worry to insurers, insurance associations and the people of major metropolitan areas and to those with new building projects and commercial entities at risk.
PIA National is part of a business coalition led by the U.S. Chamber of Commerce that is urging Congress to pass the TRIA extension. The coalition has sent a letter to the House urging renewal and it is signed by 407 members. That membership includes insurers and insurer associations and agent associations like the PIA.
The letter said, “TRIA has made it possible for the American economy to get the coverage it needs, while protecting the taxpayer. By maintaining our economic stability in the face of ongoing terrorist threats, TRIA serves as a vital public-private risk sharing mechanism. TRIA fosters certainty in the marketplace by ensuring that private terrorism risk insurance coverage remains commercially available at virtually no cost to the taxpayer.”
The letter went on to say: “Without the backstop that TRIA provides, the private insurance market would simply be unable to provide adequate levels of terrorism risk insurance.”
Marty DePoy is a spokesman for the coalition. He said, “There’s an understanding of the program, and the need to get it done. This uncertainty results in business having a difficult time planning for their futures. … Without this, they have a hard time figuring out how to do that.”
Here’s the current scenario. Both houses of Congress have recessed until after the November elections. They reconvene for a lame duck session on November 12th. Some action has happened on TRIA’s renewal as both the Senate and the House have worked on bills.
PIA National supports the bill passed by the Senate a month or so back. That extension lasts seven-years. It gives insurers a heavier — but acceptable — burden of the cost of a terrorist attack.
The House has yet to act on a five-year plan passed by the House Financial Services Committee that has an even heavier responsibility for an attack on insurers. It also separates a “normal” terrorist attack from nuclear, biological, chemical and radiological attacks.
Insurers — like Council of Insurance Agent & Brokers head Joel Wood — aren’t all that optimistic the lame duck session will see results. “They generally just get done the things they need to get done — and we'd put TRIA in that category,” he said.
Wood says the lame duck session will be even less productive if Republicans gain control of the Senate. “They wouldn't have much interest in cooperatively reaching across the aisle.”
Property Casualty Insurers Association of America spokesman Nat Wienecke said the only hope for TRIA is in the second week of the session. And he notes there are a couple of other critical insurer issues on the line, too.
One is how insurers are treated as systemically significant financial entities by the Federal Reserve and the other is NARAB II. “The bottom line for the insurance industry is it's not often we have this many bills where Congress would take precious lame duck time to put to insurance issues,” Wienecke said.
Sources: PIA National, Business Insurance, Insurance Business America