After just one week of its expiry, the Terrorism Risk Insurance Act of 2002 (TRIA) is being revived. In the first days of the 114th Congress, the U.S. House of Representatives passed H.R. 26, the Terrorism Risk Insurance Program Reauthorization Act of 2015, by a bipartisan vote of 416-5, with one member voting “present.” Now the bill will move to the U.S. Senate for consideration.
This legislation is identical to S. 2244 which passed the House on December 10, 2014, and includes a long-term reauthorization TRIA. It also enacts the National Association of Registered Agents and Brokers Reform Act of 2015 (NARAB II), which establishes a permanent NARAB to streamline agent licensing. After the House approved a measure that would reauthorize TRIA for an additional six years, it moved on to the Senate, which failed to extend the program before adjourning for the year. Issues surrounding unrelated policy riders attached to the TRIA reauthorization bill ultimately blocked the possibility of bringing the measure to a vote in the Senate, according to catastrophe modeling firm AIR Worldwide.
“PCI applauds the House Leadership for making TRIA a top priority this week and the tireless efforts of Chairman Jeb Hensarling (R-TX), Ranking Member Maxine Waters (D-CA), and Subcommittee Chairman Randy Neugebauer (R-TX), all members of the House Financial Services Committee, and the many House Members on both sides of the aisle who supported TRIA,” David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI), said in a prepared statement. “PCI is grateful that an overwhelming, bipartisan majority in the House came together, again to vote to maintain America’s economic resiliency plan to recover from terrorist attacks. This long-term legislation will minimize market disruptions, maintain the availability and affordability of terrorism insurance for consumers, and protect taxpayers. We also are very pleased that a permanent NARAB II was included in the legislation. PCI calls on the Senate to act swiftly, pass H.R. 26, and send a final bill to the president’s desk in January.”
Signed into law by President George W. Bush in 2002, the Act created a federal program for insurance claims related to acts of terrorism, and provides a “transparent system of shared public and private compensation for insured losses resulting from acts of terrorism,” according to the U.S. Department of Treasury. Since then, the legislation had been amended and extended twice.
The Independent Insurance Agents & Brokers of America also praised the U.S. House of Representatives for passing H.R. 26 extending TRIA and enacting NARAB II. ““While it is regrettable that the Senate last year allowed TRIA to expire, this bipartisan action today by the House is vitally important to instill confidence in markets that this new Congress will quickly act to reauthorize the TRIA program that has protected the U.S. economy since its inception in 2002,” IIABA president and CEO Bob Rusbuldt said in a statement. “This bill is imperative for stability in the insurance, real estate and lending markets, as well as providing needed agent and broker licensing reform on a voluntary basis. We ask that the Senate to pass this crucial legislation as quickly as possible so it can be sent to President Obama’s desk to be signed into law.”
In addition to reauthorizing the TRIA program for six years, the bill would also raise the trigger amount needed in total losses before the TRIA program kicks in from the current $100 million to $200 million, over five years, beginning in calendar year 2016, according to IIABA. Also over five years, starting Jan. 1, 2016, the mandatory recoupment would also go from $27.5 billion to $37.5 billion, increasing by $2 billion each year. For all events, the bill would raise the private industry recoupment total from the current 133% of covered losses to 140% of covered losses.
NARAB II would achieve much needed reciprocity in producer licensing and help policyholders by permitting greater competition among agents and brokers, IIABA said. This legislation would build upon regulatory experience at the state level, promote greater consistency in agent and agency licensing, ease the burden that many agents face in doing business across state lines, and increase consumer choice.
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