The top staff official of the Property Casualty Insurers Association of America is warning the industry that reauthorization of the Terrorism Risk Insurance Act will be an “uphill climb” in this Congress.
At the same time, the top staffer at the American Insurance Association acknowledged that “in the current economic and political climate, renewal will be tough.” However, she said that that the industry and policyholders are organized and she is optimistic that, ultimately, TRIA will be reauthorized in some form.
In his comments, David A. Sampson, PCI president and CEO, said that the industry should try to enlist Michael McRaith, director of the Federal Insurance Office within Treasury, as a supporter, because the Treasury has an institutional bias against the program.
Leigh Ann Pusey, AIA president and CEO, noted that renewal of TRIA remains a top priority for the property and casualty insurance industry in this Congress.
Sampson and Pusey made their comments at the Networks Financial Institute's Annual Insurance Public Policy Summit, held in Washington. It was sponsored by Indiana State University.
Sampson said that in order to get TRIA extended, “I think we need to develop a very thoughtful and unified industry approach on how to reach Congress on this.”
TRIA authorization runs out at the end of the current Congress, Dec. 31, 2014.
Sampson said, “Straight reauthorization of TRIA is a very, very high hill to climb.”
He added that, in general, FIO “should stay focused on that international role, but said, “[McRaith] is going to have to play an important role in the administration on TRIA—it is a place where he can spend political capital and time.”
For her part, Pusey said the industry is very organized in presenting the issue to members of Congress. She also said that a policyholder coalition, The Coalition to Insure Against Terrorism, has been reactivated.
Legislation extending the program for five years, until 2019 was introduced in the House on Feb. 5. Rep. Rep. Michael Grimm, R, and Carolyn Maloney, D, both from New York, are primary sponsors.
It also has strong support from Sen. Charles Schumer, D-N.Y.
However, Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, has made clear to industry officials that he cannot support renewal in its present form, but would entertain amendments to the current program, that is, those that would narrow the scope of the government’s liability in case of a terrorist attack.
Privately, the consensus of industry officials, both foreign and domestic, is that there is some capacity for terrorism risk coverage, but to nowhere near the extent currently provided the industry through the current version of TRIA.