Congressional panel to recommend extending TRIA with modifications
Few programs arouse as much debate — and split the insurance industry — as the Terrorism Risk Insurance Act (TRIA); House panel recommends extension of TRIA, but with modofications
Should the government be involved in the disaster insurance business? In the immediate aftermath of 9/11, many said “Yes,” and the Terrorism Risk Insurance Act (TRIA) came into existence — but only for three years. It had to be reauthorized in December 2005 — and after much debate it was, but this time for only two years, so it must be reauthorized this December or it will expire.
The debate now over the merits of the program are even more intense. The House Financial Services Committee has decided to move forward and recommend that TRIA be extended, but with a provision which would require carriers to make available coverage of a nuclear, biological, chemical, or radiological attack with a 7.5 percent insurer deductible. Government Executive’s Bill Swindell reports that this provision in the draft bill would make different sides in the insurance industry oppose each other.
In one corner, backing the provision, are the American Insurance Association (AIA) and large policyholders such as hotel and retail properties. In the other corner, opposing the provision, are the Property Casualty Insurers (PCIA) Association of America and the National Association of Mutual Insurance Companies (NAMIC). They argue that it would result in massive risk exposures for smaller companies.
The Financial Services Capital Markets Subcommittee will hold a hearing tomorrow in which witnesses of the two opposing camps will present their views. A markup is expected before the August recess.
The draft bill would also lower the program’s trigger from the current $100 million to $50 million, which was a provision that NAMIC lobbied for because it would allow smaller carriers to participate. The draft would reauthorize the program for ten years. Other modifications in the draft: It would clarify that a carrier’s exposure is limited to its deducible and copayments, and claims concerning these limits would be consolidated in federal court; it would add group life insurance coverage to the program; and it would include coverage for acts of domestic terrorism (current law applies only to acts of foreign terrorism as certified by the Treasury and State departments as well as the attorney general).
