Proponents of extending the federal government's terrorism insurance backstop face an uphill fight in the aftermath of Tuesday's national elections.
In fact, backers of the terrorism risk insurance program had predicted they would have to begin efforts to reauthorize the program, which is set to expire on Dec. 31, 2014, early in the next Congress regardless of the outcome of the elections.
“A lot of work has to be done as soon as the next Congress reconvenes for what, in all likelihood, will be a very challenging uphill battle for reauthorization,” said David Sampson, president and CEO of the Property Casualty Insurers Association of America shortly before the group's annual meeting in late October.
“The industry and policyholders are going to have a challenge on TRIA irrespective of the election results,” said Joel Wood, senior vice president of the Council of Insurance Agents & Brokers, on Wednesday. “I could argue that we have historically had somewhat greater difficulty with some conservative Republicans than Democrats, but the Obama administration likewise has proposed ending the program. There's a long time between now and the end of 2014, and shame on us, if the industry can't be successful in addressing this on an ongoing basis.
“The most important action for stakeholders on terrorism coverage is to adequately persuade policymakers that the recoupment mechanism will be effective, and that the mechanism is not a net drain on the Treasury over the long haul,” Mr. Wood said.
It is “hard to say” what the elections' effect on the program will be, said Peter Lefkin, senior vice president-government and external affairs for Allianz of America in Washington.
“To a certain degree, the president and the Democratic Party are probably more sensitive to urban constituencies that have a far greater interest in assuring that TRIA is extended again,” Mr. Lefkin said. “They have been critical (of the program), but as is frequently the case, you have a number of Democratic senators and congressmen from New York, Chicago and Boston who would have more ability to influence events” under an Obama administration than they would under a Romney administration.
“I don't know that you could today handicap” the likelihood that the terrorism insurance program will be reauthorized, said Jimi Grande, senior vice president in the National Association of Mutual Insurance Cos.' Washington office. “I'm confident that while it will be a tough uphill climb, we will ultimately maintain the public/private partnership” created by the program, he added.
“Government lags and never leads,” said John Lobert, a former insurance association executive and founder of Lobert Legislative & Regulatory Consulting in Lisle, Ill. Mr. Lobert said he does not expect swift congressional action on the program.
“Unless something is a huge issue everybody cares about, they just don't deal with,” he said, noting that Congress took years to approve a long-term extension of the National Flood Insurance Program.
“What's the closest thing we've had to terrorism — Benghazi?” he asked, referring to the September attack on the U.S. consulate in Benghazi, Libya, that killed four Americans, including the U.S. ambassador to Libya. “They're just not going to be focused on that.”
Reauthorization of the terrorism risk insurance program is a “top legislative priority” for the American Insurance Association in 2013, said AIA President and CEO Leigh Ann Pusey in a statement.
“The public-private partnership provides necessary market stability by mitigating the potentially devastating loss of capital resulting from an attack on U.S. soil through a federal shared loss program, and promoting accelerated economic recovery. AIA will continue to work with members of Congress to achieve broad bipartisan support” for reauthorizing the program before its 2014 expiration.