Financial Services Committee Approves Terrorism Risk Insurance Extension
August 2, 2007
he House Financial Services Committee yesterday approved legislation extending the federal terrorism risk insurance program. H.R. 2761, the "Terrorism Risk Insurance Revision and Extension Act" (TRIREA) passed by a vote of 49-20. Key provisions include an extension of the program for 15 years; inclusion of incentives to encourage insurers to increase coverage for nuclear, biological, chemical, and radiological (NBCR) risks; elimination of the distinction between foreign and domestic terrorism events; and a lower event trigger which should allow smaller insurers to participate in the program.
During the mark-up, an amendment was offered by Rep. Peter King (R-NY) extending the program to 15 years. This amendment passed by a vote of 39-30.
Since its enactment, TRIA has ensured the availability of affordable terrorism risk insurance in the marketplace and thereby fostered continued urban development and real estate development in the United States. While the TRIA program has successfully kept terrorism insurance affordable, the President’s Working Group on Financial Markets’ most recent report concluded that a private market for terrorism reinsurance is virtually nonexistent - especially with regard to nuclear biological chemical and radiological (NBCR) acts of terrorism. The Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA) will include provisions to:
- Extend TRIA for 15 years with current co-payments and deductibles for conventional terrorism acts;
- Expand TRIA’s “make available” requirement to include NBCR coverage;
- Change TRIA’s definition of terrorism to include acts of domestic terrorism;
- Set the program trigger at $50 million;
- Add group life insurance to the lines of insurance for which terrorism coverage must be made available;
- Decrease deductibles for terrorist attacks over $1 billion and decrease the trigger after such events; and,
- Continue to require studies of the development of a private market for terrorism risk insurance.
Please click here for a summary of H.R. 2761
The full House is expected to consider H.R. 2761 when it returns in September.