A newly introduced bill in the House of Representatives to expand and continue the federal backstop for insurers' terrorism losses has the support of the Risk and Insurance Management Society, with some reservations, the group announced.

RIMS said it was commending Congress and the House Financial Services Committee on Monday's introduction of H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act (TRIREA) of 2007.

But while RIMS said it backs the 10-year extension and inclusion of domestic terrorism language, it cited concerns about how a nuclear, biological, chemical and radiological attack provision would impact on the market.

“We like the bill, we're very supportive of it, we think we got pretty much all of what we were hoping for,” Terry Fleming, member of RIMS board of directors and director of the division of risk management for Montgomery County, Md., told National Underwriter. “We could have used a longer period for the extension because we think the longer period means more capacity that will come into the marketplace.”

He said RIMS has been pushing for an extension of at least 15 years. Mr. Fleming added that he expects there will be more of a challenge in the Senate.

He noted that Sen. Christopher Dodd, D-Conn., chairman of the Banking, Housing & Urban Affairs Committee, has indicated he'd like to see a permanent bill, “but I think there's some opposition there, from what we've heard.”

At this point, he said, there isn't much RIMS can do, except lobby, which it did recently.

Mr. Fleming said in a statement that RIMS “strongly supports the reauthorization of TRIA and believes the introduction of this important measure represents the commitment of Rep. Mike Capuano, D-Mass., on the Financial Services Committee, and Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee, to protect the nation's economic security.”

He continued: “Acts of terrorism are difficult to predict, making them difficult to price. Without some type of certainty to make reasonable estimates of terrorism losses, the insurance market will not provide coverage. This legislation goes a long way in ensuring that terrorism insurance remains available and affordable for U.S. companies, and to keep the market and national economy stable.”

The Terrorism Risk Insurance Act was extended for two years in 2005 and is set to expire at the end of the year.

RIMS said the newly introduced legislation offers significant improvements to the program and the organization is pleased to see language giving it a 10-year extension; eliminating the distinction between foreign and domestic terrorism; and addressing the issue of coverage for nuclear, biological, chemical and radiological (NBCR) events.

Some other important provisions include setting the program trigger at $50 million; adding group life to the lines of insurance for which coverage must be made available; offering decreased deductibles and triggers for areas previously impacted by a significant terrorist attack; and establishing a Commission on Terrorism Risk Insurance to further study and evaluate the program moving forward.

The creation of a long-term program, which addresses both conventional and NBCR terrorism risk, is essential for the health of the economy, RIMS said, adding that it remains concerned with a provision of H.R. 2761 that would expand the current program significantly by applying a “make-available” requirement to NBCR coverage.

“Lumping the NBCR make-available provision with existing mandatory make-available provisions could diminish capacity,” Mr. Fleming said. “Because NBCR exposure is not calculable for premium purposes–and is therefore an uninsurable risk–the concern is that smaller companies may opt to leave the market, leaving larger companies to offer minimum limits at a high price.”

RIMS said it has done substantial lobbying on TRIA and is committed to working with Congress as the legislation advances and the debate continues.

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RIMS Has NBCR Impact Worries But Backs TRIA Bill

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