The House Financial Services Committee has passed a bipartisan extension of the Terrorism Risk Insurance Program (TRIP). The committee vote was unanimous 57 to 0. The bill now goes to the full House.
The committee’s bill pretty much leaves TRIP as it is now and extends the program for seven years instead of the bill’s original 10. Also required is a report by the Government Accountability Office (GAO). The bill’s language says it will look at “cyber terrorism risks, and require biennial Treasury reporting that includes disaggregated data on places of worship.”
The bill also requires the GAO to analyze the problems, vulnerabilities and costs a terrorist attack would cause to the nation’s infrastructure. It said the GAO should explore “cyber liability under a property and casualty line of insurance is adequate coverage for an act of cyber terrorism.”
It also wants an exploration of how cyber risks can be adequately priced and it wants Congress to be prepared to meet the next “generation of cyber threats.”
TRIP — or TRIA as it was originally called — is set to expire at the end of 2020.
Jon Gentile — the vice president of government relations for PIA National — said the association is pleased with the rapid action by the committee.
“PIA commends Chairwoman Maxine Waters and the House Financial Services Committee for unanimously passing a common-sense, long-term extension of TRIP,” Gentile said. “We are pleased that this bill passed the committee over a year before the current law is set to expire. A timely reauthorization well in advance of expiration is important to provide stability to policyholders and the markets.”
PIA National also supports the study on cyber terrorism, including whether the current risk-share system is appropriate for a cyber terrorism attack, and whether cyber risk coverage can be adequately priced by the private market.
Lauren Pachman, Esq. is PIA National’s counsel and Director of Regulatory Affairs. “This bill ensures that terrorism risk insurance coverage will continue to be available and affordable over the long term. We urge quick action by the full House and then the Senate,” Pachman said.
House Financial Services Committee Chairwoman Rep. Maxine Waters is very pleased at the results and said it has a lot of support not only in Congress but with over 300 organizations.
“Nearly two decades after TRIA was enacted, TRIA has thankfully never been triggered, and the program is working as intended, effectively protecting our economy from the costs of a terrorist attack and providing security for many of our nation’s hospitals, stadiums, schools and small businesses,” she said.“Without a reauthorization, the program would expire at the end of 2020, but we could experience the harmful effects of a failure to reauthorize as soon as January of 2020.”
The industry also likes what the committee has done and hopes the full House and the Senate will pass the bill and pass it quickly.
The American Property Casualty Insurance Association (APCIA) senior vice president is Nat Wienecke said, “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. We urge the full House to take up and pass this bill quickly.”
Jimi Grande of the National Association of Mutual Insurance Companies (NAMIC) agrees. “The TRIA program has been an essential part of preserving our national economic security since it was established in the wake of the 9/11 attacks. The presence of the program has ensured a competitive marketplace for commercial terrorism coverage that is needed across all industries and all areas across the country.”
Grande continued and pointed out the most important reason TRIP must be continued.
“Unfortunately, the threat of terrorism has not gone away, and may always be with us. It is imperative that Congress not wait until next year’s deadline and instead move swiftly to send the Financial Services Committee bill to the president’s desk for signature as soon as possible,” he said.
Not everyone likes the House bill. Robert Hunter of the Consumer Federation of America (CFA) said TRIP is not needed in its current form.
“We believe the program is no longer needed, and this public subsidy of the overcapitalized insurance industry should be wound down,” Hunter said. “If Congress wants to extend TRIA, it should no longer be as a corporate welfare program, instead, it should require insurance companies to pay a fair, actuarially sound premium for any federal backup of private coverages that Congress authorizes.”
Source links: PIA National, Insurance Journal, Business Insurance