Update December 19, 2014: Much has happened since this post was initially published! It's now looking likely that TRIA will expire on December 31. Read our recent NewsALERT for the latest information.
I'm pleased to report there have been positive efforts by Congress to advance the reauthorization of TRIA since my previous post. Last week, House lawmakers passed a TRIA extension bill with a strong bipartisan vote, 417-7. This last minute legislation passed by the House is actually an amended version of the Senate bill (S.2244), which was passed by the full Senate in July. The amended measure includes a number of changes to the current TRIA program, but still largely resembles the original language contained in the Senate bill. Some important aspects of the House approved bill include:
- Extends the Terrorism Risk Insurance Program (TRIP) for six years through December 31, 2020
- Federal share gradually decreases from 85% to 80%
- Program trigger gradually increases from USD 100 million to USD 200 million
- Insurance Marketplace Aggregate Retention for Mandatory Recoupment is gradually increased from USD 27.5 billion to USD 37.5 billion
- The Secretary of State is removed from the certification process, which instead requires consultation with the Secretary of Homeland Security
- GAO will conduct a study to determine the feasibility of collecting premiums up front from participating insurers
- An advisory committee on risk-sharing mechanisms will be established to encourage growth of terrorism reinsurance coverage in the private market
- The Secretary of the Treasury will begin to require participating insurers to report terrorism insurance data
There are also two policy riders attached to the TRIA reauthorization legislation:
- The first rider aims to establish the National Association of Registered Agents and Brokers (NARAB). This legislative solution will streamline the licensing process to allow insurance agents and brokers to operate on a multi-state basis. The insurance industry largely supports this solution and has been lobbying for NARAB to be established for many years now.
- The second rider to the TRIA bill aims to modify the Dodd-FrankAct and essentially would exempt non-financial companies from margin and capital requirements when dealing with transactions in the derivatives market.
The bill now heads back to the Senate for a final vote before it can be sent to President Obama for his signature. Since this House-approved bill still largely resembles the TRIA measure passed by the Senate earlier this year, you might assume that the bill will sail smoothly all the way to the President's desk. Unfortunately, this is not necessarily what will happen. Democratic leaders have expressed serious concern regarding modifications to the Dodd-Frank Act. And while the White House had previously expressed support for the Senate version of the TRIA reauthorization bill, it said last week that it "strongly opposes" using the TRIA bill as a vehicle to modify unrelated financial regulatory provisions. The White House stopped short of threatening to veto the bill, however.
The House officially adjourned for the year on December 11,leaving the onus on the Senate to take up TRIA next. While time is limited, we do expect that the Senate will vote soon to extend this very critical insurer program before adjourning for the year. Stay tuned for what will likely be the final chapter in the TRIA reauthorization saga.