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Senate approves federal terrorism insurance backstop

Posted On: Jan. 8, 2015 12:00 AM CST

Senate approves federal terrorism insurance backstop

The Senate on Thursday followed the House of Representatives’ lead by approving legislation that would reinstate the federal terrorism insurance backstop through the end of 2020.

The Senate approved the bill — H.R. 26, the Terrorism Risk Insurance Program Reauthorization Act of 2015 — on a 93-4 vote. On Dec. 31, 2014, TRIA expired after an earlier bill died in the Senate last month.

The legislation, the top priority of the commercial insurance sector, now goes to President Barack Obama for his signature.

The measure is identical to a compromise measure approved by the House last month. The bill calls for extending the program for six years, gradually increasing the trigger for activating the backstop to $200 million from the current $100 million and gradually increasing the industrywide retention to $37.5 billion.

The bill also would establish a new National Association of Registered Agents and Brokers that would streamline interstate agent licensing.

The House on Wednesday voted 416-5 to extend the program, created by the Terrorism Risk Insurance Act of 2002.

The terrorism insurance backstop, which enjoyed widespread support from risk managers, insurers, agents, brokers and the business community as a whole expired on Dec. 31, 2014, after retiring Sen. Tom Coburn, R-Okla., blocked consideration of the bill because he opposed a NARAB provision contained in the bill.

The Senate approved the bill after turning back an amendment offered by Elizabeth Warren, D-Mass., that would have removed a provision not related to terrorism insurance. The so-called “end user” of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires companies to put up collateral when trading derivatives and has no connection to insurance issues. Critics of the provision in both parties said that it placed undue burdens on companies such as agricultural firms that had nothing to do with the financial crisis of 2008.