The House Financial Services Committee voted to extend the federal Terrorism Risk Insurance Act last Wednesday, but not before adding another five years to legislation that originally proposed a 10-year extension.

The bill, HR 2761, known as the Terrorism Risk Insurance Revision and Extension Act, was approved by a vote of 49-20.

In late July, a House Financial Services Subcommittee had previously approved a version of the bill that would have extended the program until 2017.

The additional five years, which would keep the program running until 2022, came via an amendment proposed by Rep. Peter King, R-N.Y., the former chairman and current ranking minority member of the House Homeland Security Committee, and Rep. Gary Ackerman, D-N.Y.

The amendment was approved by a vote of 39-30, with several Republicans cautioning during debate that the supporters might be asking too much.

Rep. Richard Baker, R-La, said: “You may well lose more than some Republican votes. You may have lost the bill.”

Rep. Baker said the extension would put the bill under a “veto threat,” and the committee's ranking Republican, Rep. Spencer Bachus, R-Ala., introduced a letter from Treasury Secretary Henry Paulson stating that the Bush administration is “strongly opposed” to the TRIA extension.

Committee Chairman Barney Frank, D-Mass., noted, however, that two years ago members of the panel received a letter from Mr. Paulson, who was then head of Goldman Sachs, stating his belief that a private market would not develop in the absence of the TRIA program.

“He's entitled to follow administration policy,” Rep. Frank said, referring to Mr. Paulson. “We're entitled to know that's going on.”

After the vote on the bill, the Treasury reiterated its opposition to the measure, arguing that it runs counter to stated public policy goals of a temporary program that continually increases industry retention levels.

“We are particularly disappointed with the committee's decision to extend the program for 15 additional years,” said David Nason, Treasury's assistant secretary for financial institutions. “This extension runs counter to the public policy goal of reducing and eventually eliminating the federal government's role in the terrorism insurance market, and it sends the wrong message to the marketplace for a program that was intended to be temporary.”

Other amendments sought to address concerns regarding the scope of the program and its impact, particularly the effect of the legislations “make available” requirement for nuclear, biological, chemical and radiological attacks on small insurers.

An amendment offered by Rep. Donald Manzullo, R-Ill., would give the Treasury Secretary authority to exempt small insurers from the requirement if the Treasury determined that it would put them at risk for insolvency.

The bill also established a new threshold for the legislation's “reset” provision, which would make it easier for insurers to underwrite terrorism coverage in areas hit by a previous attack–and charge lower rates than they would otherwise.

It does so by mandating that insurers get federal help sooner in the event of a subsequent attack through lower deductibles and triggers than those imposed in areas that have not been hit. Such would be the case for any “previously impacted area” designated by the Treasury.

The amended provision would reduce the threshold for federal intervention from $100 million to $50 million in the years following a terrorist attack that inflicts more than $1 billion in insured losses.

Although Republicans cautioned the expanded bill would face a tougher road in the Senate, Senate Banking Committee Chairman Chris Dodd, D-Conn., praised the vote approving the TRIA extension.

“To better prepare our nation's economy against any future terrorist threat, we need to provide a federal backstop that will continue to allow our economy to prosper,” he said. “That is what TRIA has done, and needs to continue to do in the future.”

Insurance industry groups were equally approving of the passage of the bill.

“This bill strikes an appropriate balance and addresses the needs of insurers–both big and small–and the needs of policyholders who collectively seek a workable means of providing this economic safety net,” said Marc Racicot, president of the American Insurance Association.

Marliss Browder, senior federal affairs director in the Washington office of the Indianapolis-based National Association of Mutual Insurance Companies, applauded the changes made to the bill via the amendments. “These changes were among NAMIC's top priorities, and we are very pleased with them,” she said.

Robert Rusbuldt, chief executive officer of the Independent Insurance Agents and Brokers Of America, said: “This legislation is crucial for the business customers of independent agents and brokers and for our nation's economic security,” expressing hope that it will be signed into law prior to the program's expiration at the end of the year.

The Coalition to Insurance Against Terrorism, a consortium of groups representing the real estate, entertainment, transportation, manufacturing and construction industries, also hailed the committee vote. The TRIA extension legislation, said CIAT Steering Committee Coordinator Martin DePoy, “is essential to maintaining the security of the nation's workers and businesses against the threat of terrorist attacks after the expiration of TRIEA at the end of this year,” referring to the Terrorism Risk Insurance Extension Act, the existing successor legislation to TRIA, which was enacted in 2002.

Special Reports /

House Panel Votes To Extend TRIA To 2022

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