The property and casualty insurance industry lauded the Senate Banking Committee for reporting out a Terrorism Risk Insurance Act extension Tuesday, but "caution" remains a byword because it is not certain when Congress will ultimately act, and whether final legislation will provide the same federal support as current law.

The bill sent to the full Senate yesterday is S. 2244, the Terrorism Risk Insurance Program Reauthorization Act of 2014. The current reauthorization expires Dec. 31.

Wendy A. Peters, senior vice president, Willis North America's Terrorism Insurance Practice, says the 22-0 vote Senate-panel vote provides "momentum" for eventual re-enactment, and "bodes well for passage prior to the fall."

Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), says the panel's action "represents a significant step forward toward reauthorization," and the unanimous vote "proves there is strong bipartisan support for the program."

Nat Wienecke, senior vice president, federal government relations at the Property Casualty Insurers Association of America (PCI), called it "a big step toward minimizing disruptions in the terrorism insurance market."

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, called on other legislative bodies to follow the Banking panel's action. "With approval by the Senate Banking Committee, we're hoping that the pace of progress for reauthorizing the TRIA program will pick up considerably," he says. "Given the unqualified success of the TRIA program, and the widespread agreement on both sides of the aisle that it should be maintained, reauthorization has been put off for far too long."

Charles Symington, senior vice president of external and government affairs for the Independent Insurance Agents and Brokers of America, says, "It is critically important that agents and brokers have the ability to provide protection to our customers in the form of terrorism insurance, and the current TRIA program has worked well to ensure the availability of this coverage."

Mike Becker, executive vice president & CEO of the National Association of Professional Insurance Agents, adds, "PIA strongly supports a clean bill providing for a long-term reauthorization."

Concerns

While industry representatives were supportive, that support does not come without concerns. PCI's Wienecke, for example, says PCI member companies "remain concerned with the language in the legislation increasing each insurer's co-share by a third, from 15% to 20%."

Willis' Peters spoke to the impact of "the protracted delay and lack of clarity" as to what the reauthorization legislation will ultimately look like. She says this uncertainty "is negatively impacting the industry."

She also says the private-market insurance, with limited availability in highly concentrated risk areas, remains insufficient to fill the demands of the current marketplace.

"More specifically, many workers' compensation insurers, when faced with potential credit rating downgrades in the absence of a solution, have been forced to offer significantly reduced lines or withdraw from the market altogether," Peters said.

What will the House do?

Peters also says what course the House Financial Services Committee will take remains a concern.

Peters says the panel has yet to release a formal draft of its legislatives changes, though sources widely anticipate this will be far more limiting than that proposed by the Senate. "While the consensus is that some variation of the current legislation will be the basis of an extension going forward, certain key elements of the proposals have raised concerns—particularly those which have been suggested by the House Financial Services Committee staff in their briefing memorandum," Peters says.

The Self-Insurance Institute of America (SIIA) also voiced concern about the intentions of the House.

The SIIA says in a statement that, based on concerns about the House FSC draft and the panel's apparent intention to "reform the program," it has had private discussions with the committee staff.

At the meeting, the SIIA officials say they "outlined concerns about the future treatment of captives and urged the committee to refrain from restricting their access to TRIA coverage." The statement says SIIA and other industry groups "are continuing discussions with committee staff and members to help craft an effective and politically workable reauthorization."

Special Reports /

Industry's TRIA Reaction: Praise for the Senate; Concerns About the House

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