Washington, D.C. - The U.S. House of Representatives on Wednesday passed a bill extending a federal program that guarantees the government's support of some losses from terrorist attacks, a measure that insurers and property owners call critical to the economy.
The Senate has already approved separate legislation, so negotiators must now meet to collaborate on a compromise bill. The program, enacted after the September 11, 2001 attacks, is set to expire December 31 unless extended.
Meanwhile, the Independent Insurance Agents & Brokers of America (Big "I"), an Alexandria, Va., association that represents more than 300,000 independent insurance agents, brokers and their employees, is asking for a speedy House-Senate conference to produce and pass unified legislation.
"The Big "I" has consistently supported the continuation of the current terrorism insurance backstop or a modified one, and it has noted in testimony before Congress that action is needed before the Terrorism Risk Insurance Act (TRIA) expires," says Big "I" CEO Robert Rusbuldt. "This legislation is crucial for the business customers of independent agents and brokers, for continued economic growth in America, and for our nation's economic security."
"We are now on the cusp of keeping a much-needed terrorism backstop in place," says Charles E. Symington Jr., Big "I" senior vice president for government affairs and federal relations. "We are very confident that an extension can make it through conference and to the President's desk before the end of the year, and we will do everything we can to help accomplish this goal."
In addition to extending the federal backstop on a short-term basis, the House bill helps address the long-term need for coverage. It will encourage risk-sharing mechanisms and authorize capital-reserve accounts that will help the market increase its own capacity and gradually phase out federal involvement. A public-private, nine-member commission and several studies are proposed in the bill, including a Big "I"-supported natural-disaster study.
The Senate bill sets the floor for "triggering events" at $50 million in 2006 and $100 million in 2007. It also requires that insurers make coverage available to policyholders in all lines covered by the program, and sets individual insurer retention levels at 17.5 percent of premiums collected in TRIA-covered lines in 2006 and 20 percent of such premiums in 2007. The House bill sets various premiums for differing types of coverage.
According to the Big "I," terrorism coverage is a national issue, and the availability and affordability of terrorism insurance is a business problem throughout the nation.
"Both the House and Senate bills address deductibles and triggering events, and these parameters will help avert devastating consequences on smaller businesses and our members. This is good for the economic health of Main Street America," says Brendan Reilly, director of federal government affairs.
Source: Reuters, IIABA
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