House Debates Extending Terrorism Risk Insurance
Marking the beginning of what is expected to be a long debate, the House Financial Services Committee held a hearing on June 21 on extension of the Terrorism Risk Insurance Act (TRIA) beyond its current expiration date at the end of this year.
The legislation was initially enacted in 2002 to provide a federal backstop for insurance companies in the event of a major terrorist attack after many insurers started excluding terrorism events from their policies following 9/11.
The measure was extended for two years in 2005.
During the hearing, Assistant Treasury Secretary for Financial Institutions David Nason indicated that the Administration wants a two- to three-year extension of TRIA and is opposed to the longer extension and program expansion that would be provided by H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA), which was introduced by Rep. Mike Capuano (D-Mass.) and House Financial Services Committee Chairman Barney Frank (D-Mass.).
The House bill includes the following provisions:
- An extension of TRIA for 10 years with current co-payments and deductibles for conventional terrorism acts
- Making coverage available for nuclear, biological, chemical and radiological events
- Including domestic terrorism under the definition of terrorism
- Setting the program trigger at $50 million in insured losses
- Adding group life insurance to the lines of insurance for which terrorism coverage must be made available
- Decreasing deductibles and triggers for areas previously hit by a significant terrorist attack
- Continuing to require studies of the development of a private market for terrorism risk insurance
While the House Financial Services Committee is expected to pass H.R. 2761 in the coming months, only a narrower bill is likely to prevail in the Senate this year, according to NAHB government affairs staff members.
Since the 9/11 attacks, NAHB has strongly advocated legislation to provide secondary insurance coverage for acts of terrorism, and will continue to monitor this issue as it moves through Congress to ensure that the critical insurance needs of the association’s members are addressed.
To read the legislation, click here and enter H.R. 2761 in the box at the center of the page.
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252.