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Congress Works to Extend Federal Terrorism Insurance
The Senate approved legislation last week that would provide a two-year extension on federal terrorism insurance that is due to expire at the end of this year. A similar measure was approved by the House Financial Services Committee and the full chamber is expected to take up the bill next month.
Enacted in 2002 in the wake of the Sept. 11 terrorist attacks, the Terrorism Risk Insurance Act (TRIA) is intended to provide a backstop for insurance companies in the event of another attack on American soil.
Senate bill S. 467 and its House counterpart, H.R. 4314, would both raise the amount of damage sustained in an attack needed to trigger federal aid from the current $5 million to $50 million in 2006 and $100 million in 2007.
The Senate bill would eliminate some lines of insurance covered under the current program, including commercial auto, professional liability, surety, burglary and theft and farm owners multi-peril.
The House version would retain these lines and also make group life insurance eligible for the program.
The federal government covers 90% of terrorism-related losses over a deductible, which this year equals 15% of an insurer's premiums.
The Senate legislation would increase the deductibles for the insurers to 17.5% in 2006 and 20% in 2007.
The House panel’s measure also raises the insurers’ share, but calls for different triggers for different types of coverage. For example, in 2006 the House bill stipulates that deductibles for workers’ compensation would be 17.5% but 25% for casualty insurance.
The House bill would cover acts of domestic terrorism while the Senate bill does not.
Once the full House approves H.R. 4314, differences between that bill and its Senate counterpart will be reconciled in conference.
To read the legislatioin, click here and enter the bill number in the box at the upper left.
For more information, e-mail Greg Brown at 800-368-5242 x8421.
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