A House legislative discussion draft calls for reauthorizing the federal government's terrorism insurance backstop program through the end of 2019.
In addition, the draft TRIA Reform Act of 2014 would gradually increase the amount of losses insurers would have to sustain before they could tap into the program and would treat losses stemming from acts of terrorism involving nuclear, biological, chemical and radiological attacks differently than those arising from conventional terrorist attacks.
The minimum trigger for the program to respond to traditional terrorist attacks would be increased over five years to $500 million while maintaining the current $100 million minimum trigger for NBCR attacks.
The measure also calls for the U.S. comptroller general to conduct a study on the “viability” of the government to assess and collect upfront premiums from insurers that participate in the program and the possibility of creating a capital reserve fund that would require insurers to dedicate capital “specifically before such losses are incurred.”
As part of that provision, the study would be required to examine practices in international markets to determine how to establish such reserve funds.
The draft was prepared by Rep. Randy Neugebauer, R-Texas, the chairman of the House Financial Services Committee's Housing and Insurance Subcommittee. According to sources, a final version of the bill could be introduced as early as Friday, with the committee taking up the bill next week.
Industry reaction favorable
A spokesman for the American Insurance Association in Washington said in an email that the insurer trade group is pleased that the leadership of the committee “is moving the legislative process forward.”
The AIA expressed concern, however, “with any potential provisions such as a bifurcated approach on NBCR and increases in the program's trigger and co-share that could lead to decreased market capacity.”
“I am encouraged by the release of the House draft proposal,” said Nat Wienecke, senior vice president for federal government relations in the Property Casualty Insurers Association of America's Washington office in a statement. “It's urgent that Congress move quickly to finalize legislation and send it to the President for his signature before the August recess.”
A measure that would extend the program, which was created by the Terrorism Risk Insurance Act of 2002, for seven years while requiring insurers to bear a greater portion of the losses from future catastrophic terrorist attacks won the Senate Banking, Housing and Urban Affairs Committee's approval earlier this month.