The chairman of the House Financial Services Committee says he wants to provide certainty to the Terrorism Risk Insurance Act.

To that end, Rep. Jeb Hensarling, R-Texas, today proposed a “clean” seven-month extension of the current program, until Aug. 1, 2015, in case Congress is unable to come to terms on longer-term reauthorization legislation. Hensarling says the clean extension, if necessary, would allow further debate on the future scope of the program without jeopardizing the marketplace.

But an industry official, who asked not to be named, says the clean extension offering is not a sign that Hensarling is willing to compromise on his House bill calling for a slimmed-down version of TRIA as part of a five-year extension, but rather it is “a threat.” That is, the official says Hensarling is betting he would have a more conservative Congress to work with after the mid-term elections and “wait for a 'better' Congress rather than being jammed by the Senate and industry.”

The program's current reauthorization expires Dec. 31.

Hensarling unveiled his clean-extension proposal as he convened a markup on H.R. 4871, the TRIA Reform Act of 2014, which is the House's extension bill that effectively phases out the program after five years for all terrorism events other than those caused by nuclear, biological, radiological and chemical (NBCR) attacks.

Companion Senate legislation, S. 2244, the Terrorism Risk Insurance Program Reauthorization Act of 2014, would extend the program essentially in its current form for seven years, although it does contain some changes opposed by the industry such as increases industry co-shares by one-third over a five-year phase-in period.

Hensarling's bet, if the industry official is right about his intentions, may pay off. A new poll today by Democracy Corps, which is headed by Democrats James Carville and Stanley Greenberg, appears to acknowledge that the best the Democrats—who now control the Senate—are likely to do is get an even split in the Senate, 50-50.

Hensarling outlined his thinking on the TRIA issue: “I have concluded that today there remains a need for a federal backstop against heinous acts of terrorism that cannot be reasonably modeled, reasonably mitigated, and whose catastrophic size truly impacts our economy.”

But, he adds, “I also know there remains much capacity within the insurance and reinsurance industries to cover far greater portions of this risk.”

At the markup, Rep. Maxine Waters, D-Calif., says H.R. 4817 “has come a long way from initial drafts,” but she joins lawmakers, policyholders and insurers in continuing to express serious concerns. “I'm disappointed that Republicans would not work with us to make changes that would have made this markup a bipartisan one.”

Specifically, she says H.R. 4817 “punishes small, regional and niche insurers and contradicts one of the fundamental purposes of TRIA—to make terrorism coverage mandatory and available.”

The panel held a spirited debate on H.R 4817, its version of the TRIA reauthorization legislation, but postponed a vote until 9:15 a.m. Friday. Besides voting on the Republican version of TRIA reauthorization, the committee will also vote on a Democratic bill that calls for a straight, 10-year extension of the current TRIA bill, as well as bills that would add creation of the National Association of Registered Agents and Brokers (NARAB) to H.R. 4817.

The panel is expected to reject the Democratic alternative. It will also vote on two bills that would bar the Financial Stability Oversight Council from designating any more financial institutions as systemically significant financial institutions (SIFI). One would impose a six month moratorium, and another a one-year moratorium.

Nat Wienecke, senior vice president, federal government relations, for the Property Casualty Insurers Association of America, says, “Today the Financial Services Committee met and had an encouraging productive debate on TRIA reauthorization. We look forward to the Committee reconvening tomorrow to vote on the TRIA reauthorization provisions pending before the Committee. We are also very pleased that NARAB II was adopted by the Committee and will be included in the House TRIA Reform Act.”

Special Reports /

Is Hensarling Betting on More Conservative 2015 Congress with 'Clean' 7-Mo. TRIA-Extension Alternative?

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