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Thursday, June 12, 2014

HFSC Releases TRIA Legislation - Committee Vote Expected by July 4

Last night, House Financial Services Insurance Subcommittee Chairman Randy Neugebauer (R-Texas) provided Committee members with the text of the HFSC TRIA bill, which he plans to file on Friday or Monday. ABIA was able to obtain a copy of the text.

The Committee is expected to vote on it before July 4 and Neugebauer is pushing for a floor vote before the August recess. Some Committee members would prefer a simple renewal of the program, including New York Republican Rep. Peter King, who stated that he plans on supporting it in Committee in order to move it to the House floor and then Senate conference, where he expects to be able to negotiate for a more straight forward renewal.

As expected, the HFSC bill will reduce the government’s liability and, following the GAO's recommendation for Treasury to gather more data on TRIA, mandates that Treasury study the possibility of creating a reserve fund and create an advisory committee to encourage expansion of a private terrorism insurance market.

Among the HFSC bill provisions:
  1. Renews program for 5 years;
  2. Insurers are responsible for the first 20% of all damages under the program;
  3. Bifurcates NCBR and conventional acts;
  4. Phases-in the industry deductible increase for conventional act from the current 15% to 20% in 2019 (1%/year). NCBR would remain at 15%;
  5. Requires the Treasury Department to: a) within 15 days issue a preliminary certification notice to indicate if an act is expected to be certified and b) make a decision to certify in 90 days;
  6. If the Secretary does not certify an act in 90 days, then it is considered to not be an act of terrorism;
  7. Beginning on January 1, 2016 the recoupment amount increases from the current 133% to 150%;
  8. Allows small insurers to opt-out. The current program does not allow property/casualty insurers to opt-out of terrorism coverage. The increase to $500 Million trigger would be difficult for small insurers to meet.
Provisions related to data gathering of the program:
  1. Requires the Treasury Department to study the possibility of creating a reserve fund;
  2. Requires insurers, beginning in 2016, to submit information to the government about premiums they earn and the pricing of terrorism coverage; and 
  3. Creates an advisory committee designed to encourage the expansion of a private terrorism insurance market.
ABIA has updated our members-only TRIA matrix

Indicates ABIA members-only material. Not an ABIA member? Contact Jennifer Hatten to learn about the benefits of membership and ways to join here. Visit our membership page to learn more.

Are you an ABIA member but not yet on our ABIA Network? Contact Deanne Marino for an invitation.

If you are a member of the ABIA and would like to learn more about our support of TRIA or join our TRIA Task Force, please contact us and visit our website.