Two senior Republican House members are asking the GovernmentAccountability Office to expeditiously prepare a report on theTerrorism Risk Insurance Act, and the potential impacts ofreauthorization versus non-reauthorization. 

Meanwhile, Standard & Poor's said yesterday it is"cautiously optimistic" that Congress will ultimately renew theTerrorism Risk Insurance Act, but the ratings agency acknowledged"there is the possibility" that reauthorization could be delayeduntil early 2015.

Reps. Ed Royce, R-Calif., and Randy Neugebauer, R-Texas, bothranking members of the House Financial Services Committee,requested the GAO complete a report on TRIA by May 15, and beprepared to provide an oral status report with initial findings byApril 15.

"The results of this study will assist members of Congress, asthe House and Senate consider legislation to extend TRIA; however,completion of the study should not be viewed as a prerequisite forconsideration of a bill," the representatives say in a letter.

The letter asks the GAO to project the actual and estimatedcosts of TRIA to the U.S. government and taxpayers since itsinception, including specifically administrative costs, payments toinsurers, congressional and administration budget scores and therisk assumed by the federal government.

The letter also asks the GAO to project, absent TRIA, what wouldbe the estimated cost to taxpayers and the economy in the event ofan attack similar in size to the September 11 attacks. It furtherasks the GAO to take into account any historical evidence that thefederal government has been called upon to provide disaster relieffor man-made and natural disasters of a similar size.

The representatives ask detailed questions in the letter,including how the availability and price of lines of coverage fromwhich terrorism risk may not be excluded by law—in other words,workers' compensation and certain fire-following losses—change ifTRIA was not reauthorized.

In its TRIA commentary, S&P raises concerns that "the form"of a renewed TRIA program "could differ significantly." Theanalysts says that would leave insurers holding the bag for highercosts of a terrorism-risk event.

Changes could include, according to S&P, a higher industryevent trigger for terrorism attacks, higher deductibles, greatercoinsurance requirements, lower total coverage limits, greaterrecoupment and more coverage exclusions (i.e., conventionalterrorism events).

Two large higher-education institutions in Texas also weighed inon TRIA, sending a letter to Rep. Jeb Hensarling, R-Texas, chairmanof the House Financial Services Committee, expressing their viewsregarding the importance of the program.

In a March 11 letter obtained by PC360, the University of TexasSystem says,

"Should Congress allow TRIA to expire, it is highly likely thatmany insurers would retract from the marketplace, coverage offeredwould be more restrictive, and premium costs for this coveragewould increase significantly." 

It adds, "If reasonably affordable coverage is no longeravailable, UT System would be less inclined to purchasemarket-priced coverage, resulting in increased financial exposureto its institutions and the state of Texas."

In an earlier letter to Hensarling last November, R. BowenLoftin, president of Texas A&M University, said the universityhosts a variety of public events every day, "and also conductssensitive, and, indeed, classified research for sponsoring federalagencies." The letter notes that these events raise the riskprofile of facilities throughout the university's campus.