The Senate Banking Committee today reported to the floorlegislation that would extend the Terrorism Risk Insurance Act forseven years.

The bill is S. 2244, the Terrorism Risk Insurance ProgramReauthorization Act of 2014. The panel supported the bipartisanlegislation unanimously, 22-0. TRIA's current reauthorizationexpires Dec. 31.

However, the panel declined to add any amendments to the bill,including S. 2270, "the Insurance Capital Standards ClarificationAct of 2014," which will instead be addressed by the Senate under expeditedprocedures. 

The decision to not include S. 2270 as an amendment in the TRIAbill signals the banking panel is acknowledging that theTRIA extension, while compromise legislation that increases theindustry's "skin in the game" by one-third, faces potentialheadwinds on the Senate floor and certainly in the House FinancialServices Committee.

The industry has concerns about the bill because it wouldincrease the losses insurers must cover significantly.

Under the Senate bill, the amount insurers would pay under acovered event, before federal recoupment is no longer mandatory andbecomes discretionary, would rise by $2 billion annuallyfrom the current $27.5 billion, until it reaches $37.5 billion infive years. Another change would reduce the total amount thefederal government will cover from the current 85% to 80% over thesame five-year period.

However, in an acknowledgement that the bill reported out todayis the best they will be able to get, insurance trade groups andgroups representing insureds voiced support.

This included the American Insurance Association (AIA), theNational Association of Mutual Insurance Companies (NAMIC), theProperty Casualty Insurers Association of America (PCI), theIndependent Insurance Agents and Brokers of America (IIABA), andthe National Association of Professional Insurance Agents (PIA). Onthe insured side, the Coalition to Insure Against Terrorism (CIAT)voiced support.

The Senate panel acted after a number of outside groups wroteletters urging renewal of the current program. This included aletter from all major professional sports leagues and the NationalGovernors Association.

They did so because the leadership of the House FinancialServices Committee has signaled it will support a much more modestbill. A leaked draft of the bill reveals the House wouldeffectively phase out the current program and only cover a nuclear,biological, chemical radiation event.

However, while the initial House version might call for majorchanges in the program, including higher deductibles and a shorterreauthorization period, it appears likely that the Senate bill willform the basis for the final legislation.

In an indication that support for any reauthorization of TRIAthat weakens the current bill is not unanimous in the House,Congresswoman Carolyn Maloney, D-N.Y., ranking member of the FSC'sSubcommittee on Capital Markets and GSEs, issued a statement afterSenate Banking Committee action supporting the Senate bill. "TheSenate's TRIA bill represents the type of bipartisan compromise weshould work to foster in the House," Maloney said.

Sen. Tim Johnson, D-S.D., chairman of the Senate BankingCommittee, said after the vote: "This seven year extension of TRIAwill continue to help promote economic growth and provide certaintyfor commercial property development and job creation across thecountry while protecting the taxpayer. With such a substantialbipartisan vote out of the Banking Committee, I thank my colleagueson both sides of the aisle and plan to continue working with themto move the bill through the Senate in a timely manner."

Corrected to show that, under the bill, the recoupment iswhat rises to $37.5 billion, not the deductible.