A key congressman on insurance issues introduced a bill Tuesday to extend the federal terrorism insurance backstop through 2019.
The House Committee on Financial Services has scheduled a markup Thursday for the TRIA Reform Act of 2014, the legislation introduced by U.S. Rep. Randy Neugebauer, R-Texas.
A competing Senate version of the measure proposing to extend the federal terrorism backstop — first created through the Terrorism Risk Insurance Act of 2002 — was approved by the Senate, Banking, Housing and Urban Affairs Committee earlier this month. That bill would extend the program for seven years while requiring insurers to bear a greater portion of losses from future terrorist attacks.
The current law expires Dec. 31.
The House bill differentiates between conventional terrorist attacks and nuclear, biological, chemical or radiological attacks. Beginning Jan. 1, 2016 the trigger for tapping the program following conventional attacks would increase $100 million per year up to $500 million. Meanwhile, the program trigger for nuclear, biological, chemical and radiological attacks would remain at the current $100 million.
Also starting Jan. 1, 2016, the House legislation would reduce the federal share of payments for losses from conventional terrorist attacks to 80% of insured losses by 2019. The federal share for nuclear, biological, chemical and radiological terrorist attacks would remain at 85% of insured losses.
This bill also seeks to clarify and streamline the terrorism certification process. Beginning on Jan. 1, 2015 in certifying an act of terrorism, the U.S. Treasury secretary would be required to consult with the secretary of Homeland Security and the U.S. attorney general and issue a preliminary certification within 15 days of an event. A final determination whether an event was certified as an act of terrorism would have to come within 90 days. The bill also would remove the existing $5 million threshold for certifying acts of terrorism.
Several insurance industry trade groups called for quick House action on its TRIA measure, as well speedy House and Senate agreement on a final compromise extension bill. In a statement, however, Leigh Ann Pusey, president and CEO of the American Insurance Association in Washington, expressed concern about the bifurcation in the House bill between conventional and nuclear, biological, chemical and radiological attacks, as well as changes in the trigger level and the federal co-share of paying for insured losses.
“Differentiation based on the type of event introduces needless complexity, creating potentially adverse consequences under the program,” Ms. Pusey said. “We are also concerned about the steep increase in the program trigger and co-share, which could also lead to a reduction in capacity”