Congress plans to tackle reauthorization of the Terrorism RiskInsurance Act starting in early May with Senate Banking Committeeaction. The panel appears ready to act through legislation thatwould extend the program along lines the insurance industrywants.

The current reauthorization expires Dec. 31.

The Senate appears to be prepared to sustain the approachcontained in the current legislation, which authorized the programfor seven years and established deductibles, co-pays and triggersthat made economic sense for insurers and ensured financialsecurity for insureds.

Several congressional staffers confirmed that the Senate BankingCommittee is set to move on TRIA reauthorization in May. Theconsensus staff agreement is for another seven-yearreauthorization, with slightly higher deductibles and copaysapproximating 5% over time. The staff "consensus" also calls forretaining the current trigger of $100 million while making sometechnical changes to deal with issues that have cropped up sincethe program was first launched. 

These include a request by industry for clarification of whatactually triggers a terrorist event, which is necessary for theprogram to be launched in the wake of an event. The industryconsensus is that the Treasury Department should be providedauthority to do so. This issue was touched on during House hearingson the issue last year. For example, Robert Hartwig, president ofthe Insurance Information Institute, testified at a House hearing,"It is generally agreed that we need a tightening of thatcertification process." 

The House, however, is another story. Rep. Jeb Hensarling,R-Texas, has made clear that he "wants to put his own stamp" on thelegislation, most likely through demands for more industry skin inthe game. There are signs, however, that the power of the TeaParty-types Hensarling answers to, is receding in the House. Forexample, legislation that effectively kicks down the road the majorimpact of increases to actuarial rates for the National FloodInsurance Program, and legislation extending the so-called"Doc-Fix" for physicians under Medicare, have all been pushedthrough the House recently despite determined Tea Partyopposition. 

At the same time, the Property Casualty Insurers Association ofAmerica held an event last week that yielded a letter to Congressfrom a host of members of the Chamber of Commerce indicating strongsupport for quick and certain action on this issue. The press wasnot invited. The event was held on Capitol Hill.

"Since its initial enactment in 2002, TRIA has served as a vitalpublic-private risk sharing mechanism, ensuring that privateterrorism risk insurance coverage remains commercially available atvirtually no cost to the taxpayer," the letter said. "TRIA fosterscertainty in the marketplace and allows all of these interconnectedelements of the economy to continue to move forward," it added.

PCI said its recent research confirms that business executivesare worried about the possibility of a terrorist attack happeningin the U.S. in the next few years and they are concerned the attackcould have a negative impact on the economy and significantlyimpact their business operations, according to Nat Wienecke, PCIsenior vice president, federal government relations, and RobertGordon, PCI's senior vice president, policy development andresearch, moderated a panel discussion on, "Enduring Protection andVigilance: Reauthorizing the Terrorism Risk Insurance Act," at thebriefing. 

Model Holding Company Act Re-opened forModification

The American Insurance Association secured a top priority:reopening the Model Holding Company Act for further modification,at the recent spring meeting of the National Association ofInsurance Commissioners in Orlando.

The NAIC Executive Committee voted by voice vote at theconference's plenary session last Sunday to approve reopening themodel law to change, after adding some guidance. The issue wasreferred to the Financial Condition (E) Committee where developmentof any changes would take place as part of the 2014 work of theGroup Solvency Issues (E) Working Group.  The NAIC expectsthat any amendments to the Act would be completed by year'send.

"We don't expect this to be a long process," said Adam Kerns,AIA assistant general counsel. The Executive Committee "impliedthat they wanted this done as soon as practical." 

The AIA wants the E Group to develop uniform group-supervisionlanguage that reflects the fact that interest in insuranceregulation has changed to a global issue since the last model lawwas approved in 2010. Over 20 states have adopted the latestversion of the Holding Company Model Law, Kerns said. 

"As things seemed to start moving quickly on theinternational-regulatory front, states were taking it uponthemselves to amend their Model Holding Company Acts to address theissue of group-wide supervision," Kerns said in explaining why AIAhas established uniformity as a priority. 

"It became quite apparent that the NAIC needed to re-open theModel in order to develop uniform language for the states to adopton this issue," Kerns said. "It is important that whenthese Models are enacted in the states that they are done souniformly."

"The justification for prompt NAIC action is that states havebeen adopting Model Law Holding Company Acts that are somewhatdifferent than the model, which presents problems to our members,"added Lisa Brown, AIA senior counsel & director of Compliance Resources. "Without uniformity, it presents thepotential for conflicts between the states. We want a uniformprocess developed."

This is not product specific, nor line specific," Brown said."It just deals with how you are regulated; it needs to beuniform."

She acknowledged that a primary AIA concern is for a uniformU.S. approach as  international regulatory discussions"move along rapidly." Brown said the talks are aimed "at speaking acommon language in overseeing insurance companies, and it was feltthat a uniform stance from U.S. regulators was important."

Another issue is modernization of rate and form regulationacross state lines. She said this would also likely impact foreigninsurers looking at U.S. markets "who might be discouraged becauseof the onerous regulatory regime."

On the other hand, she said, "inaction would at the same timelessen the willingness of foreign governments and insurers to letU.S. companies compete. It could be a trickle-down."