TRIA extension bill passes House Financial Services Committee with 57-0 vote

Today, the U.S. House of Representatives Financial Services Committee passed a bipartisan bill to extend the Terrorism Risk Insurance Program (TRIP) for seven years with minimal changes to the program in a unanimous 57-0 vote.

The bill also included a critical amendment that mandates for a study to be conducted by the U.S. Government Accountability Office (GAO) on cyber terrorism, including whether the current risk-share system is appropriate for a cyber terrorism attack, and whether cyber risk coverage can be adequately priced by the private market.

Organizations around the insurance industry issued statements praising the House’s vote and the passage of H.R. 4634, the Terrorism Risk Insurance Program (TRIP) Reauthorization Act of 2019, including the Insurance Information Institute (I.I.I.), the National Association of Professional Insurance Agents (PIA National), the Independent Insurance Agents & Brokers of America (the Big “I”) and the American Property Casualty Insurance Association (APCIA).

“With the current federal terrorism risk insurance program expiring at year-end 2020, the U.S. House Financial Services Committee clearly understands how the terrorism insurance market supports the economy,” Loretta Worters, Vice President of Media Relations at I.I.I. told NUPC360.

“Insurance policies need to reflect the conditions on the ground every day their policies are in force. Without a federal backstop in place in 2020, insurance markets could be disrupted.”

The significance of TRIA, TRIP for the insurance industry

TRIA was established following the 9/11 terror attacks which in total, cost both U.S.-based and international insurers a total of $47 billion in losses. Insurers were able to pay virtually all $47B of claims, but the attacks and the overwhelming insured losses they incurred made clear to insurers that if another terrorist attack were to occur, the industry simply could not cover those losses on its own.

Before 9/11, commercial insurers often neither charged for nor specifically excluded terrorism coverage. U.S.-based and international insurers were able to pay virtually all of the claims related to 9/11, but the event and its $47 billion loss cost demonstrated to insurers that if another terrorist attack were to occur, the industry could not cover those losses on its own.

In response, Congress enacted the Terrorism Risk Insurance Act of 2002 (TRIA), which created a federal backstop for insurance claims related to acts of terrorism. TRIA required that business insurers offer terrorism coverage for the types of insurance included in the act, and provided for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism, which was designed to keep terrorism risk insurance available and affordable.

TRIA advocates in the insurance industry

The Big “I” issued a statement supporting the House Financial Service Committee’s vote, and recognized Chairwoman Maxine Waters (D-California) and Ranking Member Patrick McHenry (R-North Carolina) for their efforts on this bill and its passage.

“Following the bipartisan passage out of the Financial Services Committee, the Big ‘I’ urges the U.S. House of Representatives to pass this legislation well in advance of the program’s scheduled expiration,” Wyatt Stewart, Big “I” senior director, federal government affairs said in the statement, adding,

“This legislation is vitally important to maintaining the strength of the commercial property-casualty insurance market and would provide much-needed stability to the U.S economy.”

Along with several other insurance groups, PIA National has been one major advocate for this renewal and amendment of TRIP.

In a statement praising TRIP’s reauthorization today, PIA National voiced its support for the amendment included in the bill that mandates a study to be conducted on cyber terrorism and cyber risk coverage.

“PIA commends Chairwoman Maxine Waters and the House Financial Services Committee for unanimously passing a common-sense, long-term extension of TRIP,” PIA National Vice President of Government Relations Jon Gentile said in a statement. “We are pleased that this bill passed the committee over a year before the current law is set to expire. A timely reauthorization well in advance of expiration is important to provide stability to policyholders and the markets.”

Additionally, Lauren G. Pachman, Esq., PIA National’s counsel and Director of Regulatory Affairs, added, “This bill ensures that terrorism risk insurance coverage will continue to be available and affordable over the long term. We urge quick action by the full House and then the Senate.”

See also:

•  9/11, terrorism and insurance: How TRIA came to be, and what happens if it expires
• Terrorism and political violence call for review of insurance strategy
• 6 tips for helping employees get through a terrorist attack