The Terrorism Risk Insurance Act (TRIA), the federal terrorism risk insurance programme, has been re-authorised by the US Senate in a momentous move that insurers have welcomed.
A 93-4 vote saw the Senate pass the Terrorism Risk Insurance Program Reauthorisation Act of 2014, which will extend the programme for a maximum of seven years.
The US House of Representatives are now expected to vote on the legislation
The act proposes changes to the current programme by incrementally raising the coinsurance contribution of insurers from the current 15 percent of loss, to 20 percent by 2019, once certified terrorism losses have surpassed the program “trigger” of $100 million.
The Senate has also announced a proposal to increase post-event recoupment from policyholders from the current $27.5 billion to $37.5 billion by 2019.
New York Democrat and one of the bill’s sponsors, Chuck Schumer, says: “In today’s world, Terrorism Risk Insurance has become an important pillar of our economy, and it must be extended. In a post-9-11 New York, terrorism risk insurance has proven to be an absolutely essential partnership between the government and the private sector that has turned rebuilding downtown Manhattan from a question to a certainty, and it is important that this insurance be available if anything were to happen elsewhere in the state.”
Schumer continues, “Economic development, construction, and hundreds of thousands of jobs depend on this program, and preserving it for the future is essential to our economic growth. The House should quickly abandon its approach to drastically change the program and eliminate much of the certainty that TRIA is meant to provide, and pass our bill.”
Willis senior vice president and terrorism insurance practice group leader, Wendy Peters, says: “While the action today signals a significant step forward, the House of Representatives will still need to vote on its own version of the bill which will then have to be reconciled with the Senate bill before it can be sent to the president for his signature.
She adds, “With eight days left in session before summer recess for Congress, it is likely that final congressional action will not take place until after Congress returns after labor day. If action is not completed then, the legislation will have to wait for the expected lame duck session after the fall elections.”
Aon applauds the US Senate for passing TRIPRA: “Aon is in a unique position to assess the demand, pricing and associated risks linked to terrorism in terms of global scope and premium volume placed into the market. We believe TRIA has been an unqualified success in stabilizing the insurance markets by allowing insurers to provide much-needed terrorism coverage to consumers at prices they are able to afford. Aon encourages the US Congress to proceed in a swift and collaborative manner to extend TRIA for the benefit of the US economy and policyholders across the nation.”
TRIA, TRIPRA, renewal, US Senate