Legislation was introduced in the Senate that would extend the Terrorism Risk Insurance Act for seven years—as the insurance industry wants.
A positive vote early next month in the Senate Banking Committee is expected. However, while the House's initial version might call for major changes in the program including higher deductibles and a shorter reauthorization period, it appears likely the Senate bill, S.2244, will form the basis for the final legislation.
The current reauthorization expires Dec. 31.
The primary change in the existing bill, as noted by PC360, is to phase-in the initial "skin in the game," the amount of losses insurers must cover before federal aid steps in, up from the current $27.5 billion by $2 billion annually, until it reaches $37.5 billion in five years. Another change is to reduce the total amount the federal government will cover from the current 85% to 80% over the same five-year period.
The sponsors of the bill are Democratic Sens. Charles Schumer, N.Y.; Jack Reed, R.I.; and Chris Murphy, Conn.; and Republican Sens. Dean Heller, Nev.; Mark Kirk, Ill.; and Mike Johanns, Neb.
In reaction, Tom Santos, vice president of federal affairs for the American Insurance Association, says, "We are very encouraged by the bipartisan leadership shown in the Senate. It is vital that Congress act on TRIA as soon as possible. We have some concerns, but we look forward to working through the process."
Schumer, a member of the Senate leadership, explained the importance of the bill by saying, "In a post-9-11 New York, terrorism risk insurance has proven to be an absolutely essential partnership between the government and the private sector that has turned rebuilding downtown Manhattan from a question to a certainty."
He adds that "still more to be done" and this "crucial bipartisan plan" will reauthorize and extend TRIA before it expires at year's end.
"Redevelopment and economic growth should be encouraged in New York and other high-risk areas across the country, even in the face of unfathomable terrorist events, and I will work with my colleagues to get TRIA passed this year to preserve this essential tool," Schumer says.
Rep. Maxine Waters, D-Calif., ranking minority member of the House Financial Services Committee, at the same time said in a statement that she lamented the lack of similar action in the House.
"I am encouraged by the news that leaders on the Senate Banking Committee have reached agreement on legislation to extend the critically important TRIA." She said she "applauded" the senators for taking this important step to advance the conversation on TRIA, and added that, "This progress is even more important given the House Financial Services Committee chairman's refusal to bring an extension of the program forward thus far."
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