NAIC Committee Resolution Urges TRIA Extension

"The resolution will go to the whole NAIC membership, when we have the next conference call in mid-July," said committee chairman Jose Montemayor, the Texas insurance commissioner.

He said the resolution is a straight-forward request to Congress to extend the federal backstop program for an additional two years, to help continue to stabilize the market.

The NAIC membership has sent correspondence to Congress urging the TRIA extension, but there has been no formal resolution yet.

Mr. Montemayor also said that it's been the NAIC's position for some time that the extension of TRIA would be necessary for the marketplace. "We have been in correspondence with Congress. We had given them testimony. We told them basically we wanted to see a continuation of TRIA, because we don't believe the industry has the capacity or wherewithal to take that on quite yet."

He noted that it wasn't until TRIA was approved that the industry was able to handle a lot of highly specialized risks, particularly on high-profile properties, sometimes called trophy buildings.

Aviation and aviation-related ground facilities were also having some difficulties with coverage, he observed, "and the passage of TRIA allowed us to stabilize that. And even though the take-up rate is somewhat low, it's still significant in that there is no disruption at all."

Despite unanimous passage of the resolution, there were commissioners who were less than enthused about the TRIA program. Washington, D.C., Commissioner Larry Mirel said that, for the record, he supported the two-year extension, but that more needs to be done than "just simply making permanent a law that is, mind you, really not very good."

"I think that there are problems that need long-term solutions," Commissioner Mirel said. "I supported the two-year extension because I think it would be disruptive just to let it lapse. But I think that over that two-year period, we really have an obligation to think through whether this is the best that can be done, because I can tell you it's not working very well in Washington, D.C.," he said.

"There are better solutions, and we need to really look at those," Commissioner Mirel said.

A trade group representative also observed that while the entire industry is on board for a straight two-year extension of TRIA, the program itself has room to improve.

"We still do see problems with TRIA. The group life isn't covered, and we still have real problems with the fact that the retention levels go up to 15 percent next year," said Julie Gackenbach, assistant vice president of government relations at the Des Plaines, Ill.-based Property Casualty Insurers Association of America. But, she emphasized, "we simply don't have time to address these issues. We are going to use that two-year extension period to work on longer-term solutions."