Terrorism risk insurance reauthorization legislation being introduced in the House will have a "punitive impact on smaller, regional and niche insurers and their policyholders" if it becomes law, the National Association of Mutual Insurance Companies says.
The comments by Jimi Grande, NAMIC's senior vice president of federal and political affairs, followed the release of the "TRIA Reform Act of 2014" by the House Financial Services Committee's Republican leadership. Rep. Randy Neugebauer, R-Texas, one of the primary sponsors, says he hopes the legislation can be introduced by Monday.
The bill would increase industry liability over five years to $500 million from the current $100 million for conventional terrorist attacks. It would also establish a separate program for nuclear, biological, chemical and radiation (NBCR) attacks.
By contrast, the Senate extends the program in its current form for 7 years, but increases industry co-shares by one-third under a 5-year phase-in period. The Senate bill is S. 2244, the Terrorism Risk Insurance Program Reauthorization Act of 2014.
The House bill implicitly acknowledges Grande's concern by containing a provision mandating that the Treasury Department protect small insurers by issuing new rules exempting those facing financial hardship from the current program's mandatory-availability requirement.
In his statement, Grande calls the dramatic increase in the trigger "an unacceptable change in the program."
He says increasing the program trigger "does not accomplish any of the stated objectives of the TRIA program's critics—namely, it does not reduce taxpayer exposure or shift more of the risk to the private sector."
Rather, he says, it will serve to either concentrate risk or reduce overall take-up rates "as smaller and medium-sized insurers are forced from the program."
Grande did say that, "With just months until the TRIA program expires, any sign of progress is a welcome one."
He argues that "extending TRIA should be a simple decision given the vocal support for the program from insurers, policyholders and the communities they serve."
He adds, "Congress hasn't given itself much time, and we strongly urge them to start work on this bill and ensure that terrorism coverage will be available next year for businesses and communities across the country."
At the same time, officials of the American Insurance Association say they are "concerned" with other contrasts between the expected House bill and the Senate version.
Willem Rijksen, an AIA spokesman, says the association "remains concerned with any potential provisions such as a bifurcated approach on NBCR and increases in the program's trigger and co-share that could lead to decreased market capacity."
The Property Casualty Insurers Association of America was more guarded in its reaction to release of the House bill.
Nat Wienecke, PCI's senior vice president, federal government relations, says only that PCI is "encouraged" by the release of the House draft proposal, adding, "We are working with members on both sides of the aisle to bring legislation forward as quickly as possible. It's urgent that Congress move quickly to finalize legislation and send it to the President for his signature before the August recess."
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