Yesterday, the ABIA attended a discussion on the Terrorism Risk Insurance Act (TRIA) hosted by the National Journal, which featured keynote speakers Rep. Michael Grimm (R-NY) and Rep. Randy Neugebauer (R-TX). During the discussion the Representatives shared their views on the continued need for TRIA, what changes to the current program should be included in a reauthorization bill, and when Congress would take up and eventually vote on TRIA legislation.
The discussion highlighted the disparate views even among Republican colleagues. Rep. Grimm indicated he would like to see the program eventually made permanent, while Rep. Neugebauer stated his preference for a short-term extension (2-5 years) to give time for the market to transition away from the federal government and to more private insurance involvement.
Representative Grimm has long been a strong supporter of TRIA, not surprising since his district includes Brooklyn and Staten Island. He introduced H.R. 508, which would reauthorize TRIA for 5 years without making any changes to the program’s structure. He repeatedly expressed his view that TRIA should be reauthorized as quickly as possible and include only minor changes, stating: “TRIA has become like a baby to me, that needs to be nourished and taken care of. It's good policy. It works. It's prudent fiscal policy."
Rep. Grimm would like to see the program extended for at least 5 years and then made permanent. Although his legislation does not include them, he also supports some minor changes to the program, such as an increase in the trigger from the current $100 million to no more than $200 million, but does not support increasing insurers’ deductible from the current 20% of the insurers’ earned premiums. He is concerned that increasing the trigger too much or changing the insurers’ deductible amount would price out many smaller insurers, leading to less private market involvement in terrorism insurance.
Rep. Neugebauer, who Chairs the House Financial Services Subcommittee that oversees TRIA, shared his view that he would like to cut the federal government's involvement in terrorism insurance since it could be distorting prices. "I think it is market-distorting when the federal government becomes the backstop…most of the pricing is political [not actuarial]." He also supports increasing the trigger from $100 million to as high as $500 million and possibly changing the percentage of cost sharing for the federal government.
However, both Congressmen agreed that TRIA reauthorization legislation needs to be taken up and passed as quickly as possible in order to avoid market disruptions. They agreed that they would like to see legislation passed out of the full House in the first quarter of 2014. It would then need to be sent to the Senate and that is where the timing gets tricky.
According to Rep. Neugebauer, the House Financial Services Committee has not yet had any direct discussion about TRIA legislation with the Senate. Rep. Grimm hoped that the House and Senate could send a bill to the President to sign 6-7 months prior to the program expiring on December 31, 2014 (May-June 2014). This is an ambitious goal since the House has yet to agree on what should be included. The ABIA supports TRIA reauthorization and will continue to educate members of Congress on the need for the program.
Learn more about and view a webcast of the TRIA discussion.
If you would like to learn more about ABIA's support of TRIA or join our TRIA Task Force, please contact us and visit our website.