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A group of insurer and other trade associations has sent a letter to the House of Representatives leadership expressing concern over the increased size of the so-called “trigger” in a House measure that would reauthorize the federal terrorism insurance backstop for five years.
The House's TRIA Reform Act of 2014 — H.R. 4871 — would increase the program's current $100 million trigger for tapping the program following conventional attacks by $100 million per year starting Jan. 1, 2016, to $500 million in 2019. Meanwhile, the program trigger for nuclear, biological, chemical and radiological attacks would remain at the current $100 million.
A Senate bill that would extend the program — which expires on Dec. 31 unless reauthorized — for seven years maintains the current $100 million trigger for all covered terrorist events regardless of their nature.
The terrorism insurance backstop was created by the Terrorism Risk Insurance Act of 2002 and was reauthorized in 2005 and 2007.
In a letter dated Tuesday to House Speaker John Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif., the National Association of Mutual Insurance Companies, the Property Casualty Insurers Association of America, the U.S. Chamber of Commerce and the Commercial Real Estate Finance Council said “a manageable trigger is critical to protect consumers and ensure continued widespread availability and affordability of terrorism insurance coverage.”
“Small and medium-sized insurers represent almost 98% of all insurers writing TRIA coverage and almost half of all TRIA related premiums,” says the letter, adding that the increase “will subject small and medium-sized insurers to a massive increase in their liabilities. This dramatic liability increase could not only limit the amount of terrorism insurance coverage most insurers are able to provide to Main Street businesses, but it could also impair their ability to offer the underlying non-terrorism commercial coverages, creating harmful, negative consequences for the economy and job growth.”
In a separate letter to Senate leadership, the groups urged speedy action on the Senate's Terrorism Risk Insurance Program Reauthorization Act of 2014 — S. 2244.
The U.S. terrorism insurance market continues to be “challenged” by uncertainty over whether the federal government's terrorism insurance backstop will be extended, according to a report issued Wednesday by Guy Carpenter & Co. L.L.C.