On May 1, the Chairman of the US House Financial Services Subcommittee on Housing and Insurance, Rep. Randy Neugebauer (R-TX), gave committee Republicans a draft proposal outline, since publicly circulated by media, describing the concepts and terms under which he is prepared to reauthorize the Terrorism Risk Insurance Act (TRIA). Chairman Neugebauer released only this draft outline and has not yet circulated proposed bill language, although many expect such language to be introduced within the next two weeks.
The proposal, entitled The Terrorism Risk Insurance Modernization Act of 2014 (TRIM), has the support of House Financial Services Chairman Jeb Hensarling (R-TX) and is said also to have the support of key members of the House Republican leadership, including Majority Leader Eric Cantor (R-VA). The outline proposes a three year reauthorization of TRIA, which is set to expire on December 31, 2014, and other changes to the current program including increasing the trigger limit and reducing the annual government assistance cap. The most significant change would provide different levels of federal coverage for nuclear, biological, chemical and radiological (NBCR) terrorist acts than for non-NBCR terrorist acts. The proposal also would establish a capital reserve fund with premiums collected by insurers. Thus, the House Republican proposal would represent a significant change in approach from prior TRIA reauthorizations that largely extended the duration of the then existing TRIA program without making significant changes to the program's terms.
The House Republican committee draft comes two weeks after Senator Charles Schumer (D-NY), with the bipartisan support of eight other senators, introduced a bill (S. 2244) that would extend the current TRIA program for an additional seven years through December 31, 2021, increase the aggregate retention amount by $2 billion per year from the current level of $27.5 billion until it reaches $37.5 billion and otherwise essentially extend the current TRIA program. The House Republican outline already has been sharply criticized by Financial Services Committee Ranking Member Maxine Waters (D-CA) and other Democrats who want to see the current TRIA program extended without delay for a term of anywhere from seven to ten years.
Chairman Hensarling has repeatedly expressed his intent to scale back TRIA and 'facilitate a transition to a viable market for private terrorism risk insurance.' Notwithstanding the...