U.S. Senate Banking Committee Unanimously Approves Terrorism Risk Insurance Program Reauthorization Act of 2014
Jun 3, 2014
The U.S. Senate Committee on Banking, Housing and Urban Affairs (“Committee”) unanimously approved S. 2244, also known as the “Terrorism Risk Insurance Program Reauthorization Act of 2014” (“TRIA”), during a markup hearing today, June 3, 2014. The bill extends the existing TRIA program for seven years.
“I am pleased today that the Banking Committee unanimously supported this important bipartisan bill,” Committee Chairman Tim Johnson (D-SD) said. “This seven-year extension of TRIA will continue to help promote economic growth and provide certainty for commercial property development and job creation across the country, while protecting the taxpayer. With such a substantial bipartisan vote out of the Banking Committee, I thank my colleagues on both sides of the aisle and plan to continue working with them to move the bill through the Senate in a timely manner.”
“The Banking Committee worked to develop a program that will help limit the economic damage of any future terrorist attack, make our economy more resilient, and increase taxpayer protection,” said Ranking Member Mike Crapo (R-ID). “I thank the Chairman and co-sponsors of this bill for developing a balanced extension to the program.”
The Committee news release on today’s hearing describes that, in the aftermath of the tragic September 11th terrorist attacks on the United States and, after suffering steep losses, insurance companies stopped offering terrorism coverage as part of their commercial property policies. The lack of coverage had a destabilizing effect on the nation’s economy. In response, Congress created the Terrorism Risk Insurance Program to provide a narrow and targeted government backstop for this critical insurance coverage. The program has since twice been re-authorized.
The Banking Committee has held two hearings on the importance of TRIA re-authorization. S. 2244 was introduced by Senators Schumer (D-NY), Kirk (R-IL), Reed (D-RI), Heller (R-NV) and others on April 10, 2014. Currently, the bill has 23 cosponsors. The existing TRIA program expires on December 31, 2014.
Senator Crapo explained, “The TRIA program allows the insurance industry to absorb and cover the losses of all but the largest acts of terror, ones in which the federal government would likely be forced to step in were the program not there. As part of this re-authorization, I and others pushed to decrease the size of the backstop. In order to do that, we have examined each of the policy levers in the program. This bill would increase the insurance industry’s aggregate retention level, and the company coinsurance level.
“As the program stands today, the federal government would recoup any TRIA payments up to $27.5 billion through post-event payments. This industry retention level allows the taxpayer to recover TRIA payments through an industry-wide assessment on property casualty policies and was last changed in the 2005 re-authorization.
“The bill we will mark up today increases that level by $2 billion a year, to a level of $37.5 billion, an additional $10 billion. This is a significant reduction in the potential cost to taxpayers. In addition, the bill increases the company coinsurance level. The coinsurance levels will rise from 15 percent to 20 percent over five years. This means that before the backstop is reached, each company will take on a greater portion of losses above their deductible.”
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