A bill to reauthorize the Terrorism Risk Insurance Act (TRIA) of 2002 was passed on November 20 by the U.S. Senate Committee on Banking, Housing, and Urban Affairs. The unanimous decision was made only a day after the U.S. House of Representatives voted to renew the federally backed terrorism insurance coverage backstop program, which is set to expire in December 2020.
The bill includes a provision to study cyber terrorism and the availability and affordability of coverage, specifically for places of worship.
“The bill being considered today would not only avoid significant uncertainty in the marketplace, but it also preserves the taxpayer reforms included in the last reauthorization,” said Senate Banking Committee chairman Mike Crapo (R-Idaho) in a statement.
The 2015 reauthorization “required the private insurance industry to absorb and cover the losses for all but the largest acts of terror”, Sen. Crapo said. This included requiring total insurance industry insured losses for certified acts of terror to exceed $200 million before federal assistance would become available and increasing the industry’s aggregate retention amount to $37.5 billion.
The decision was met with resounding approval from insurance industry representatives and other stakeholders.
The next steps are for the Senate Banking Committee version to be approved by the full Senate, any differences between the two measures (which are said to be virtually identical) to be reconciled, and the final bill to be signed into law by President Trump.
Jimi Grande, senior vice president of government affairs at the National Association of Mutual Insurance Companies (NAMIC) said, “With passage of TRIA reauthorization legislation out of the House on Monday, today’s unanimous passage of an identical bill out of the Senate Banking Committee demonstrates that there is little daylight between the two chambers or between the two sides of the aisle. There is no reason Congress shouldn’t be able to get a bill to the president’s desk by the end of the year.”
To get an idea of what could happen without a government terrorism backstop we’ve been searching our database for news items that appeared in the aftermath of the terrorist attacks on September 11, 2001, before the federal program was in place. Below is an abstract citing a Wall Street Journal article about the impact on workers’ compensation. This line would be one of the most affected by a lack of a backstop because, unlike other insurance lines, workers’ compensation insurers have no choice but to include terrorism coverage in their policies.
