The Republican leadership of the House Financial Services Committee is proposing a substantive reduction in potential government liability for terrorism attacks in order to have terrorism risk insurance "transition to the private sector" as soon as possible, a Republican lawmaker tells PC360.
Rep. Randy Neugebauer, R-Texas, chairman of the Financial Services panel's Housing and Insurance Subcommittee, says, "TRIA was meant to be a temporary program. We are transitioning the program in order to transfer risk where it belongs—to the private sector; to the professionals in the insurance industry." Neugebauer says these professionals "are getting compensated for taking that risk; the taxpayers are not."
Neugebauer and Rep. Jeb Hensarling, also R-Texas, unveiled today legislation that would increase TRIA's trigger over five years to $500 million from the current $100 million for conventional terrorist attacks.
Neugebauer says some changes are being made to the bill, but that he and Hensarling hope to get it officially introduced in the House by Monday.
Their bill is substantively different than legislation reported to the Senate floor June 3.
He says the new bill did not make changes to the overall structure of terrorism risk legislation, but rather "just changed the dollars a little bit" to ensure more industry and less government liability.
Neugebauer says he will strive to get the bill through Congress before it leaves for its August recess, or in September at the latest.
In comments to PC360, Neugebauer says that means he wants the bill out of the House FSC and on the House floor by mid-July so that negotiations with the Senate on conflicting versions can be started before the August recess.
He says he does not want the bill "completed in a lame-duck session, that is, no Christmas session."
Neugebauer says the history of the legislation is such that, as the federal role lessened from the original 2002 bill to the 2007 extension, industry liability increased and premiums rose. Despite that, he says, take-up rates have risen. At an April congressional hearing on the issue, Duncan Ellis, Marsh, Inc. property practice leader, said take-up rates have climbed to 62% of P&C property policies in 2014.
Neugebauer says his approach to terrorism-risk legislation is consistent with what he and Hensarling want to do with the National Flood Insurance Program. "We are trying to respond to what the insurance industry is already telling us, that there is capacity in the private sector to take on more risk."
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