Washington–The Senate early today passed by unanimous consent its version of legislation extending the Terrorism Risk Insurance Act for two years.
The legislation providing insurers with a federal backstop for terrorism losses is markedly different than companion legislation also passed Wednesday by the House Financial Services Committee.
The Senate bill cuts back on coverages, while the House bill expands coverage, specifically for group life insurance.
The House is expected to take up its version of the bill in regular order when it returns from two-week recess the week of Dec. 5.
That would set up a House-Senate conference to reconcile the differing bills.
Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, issued a statement at 1:04 a.m. confirming passage of the bill. Congress is working long hours to complete its work so it can start a Thanksgiving break this weekend before coming back the week of Dec. 5.
While extending the three-year-old TRIA, which is due to expire Dec. 31, the Senate bill markedly shrinks the scope of the federal involvement in creating a backstop for paying terrorism insurance claims.
The Senate bill raises the "trigger" for federal involvement in paying claims for an act of terrorism from $5 million currently to $50 million in the first year and $100 million in the second year.
It also raises the retention level on claims from the current 15 percent to 17.5 percent in the first year and 20 percent in the second. In addition, it reduces the number of business lines covered by the federal backstop.
And, a key point that follows the expressed desires of the Bush administration, it seeks to ensure that the federal government ends its role in providing a terrorism risk backstop after Dec. 31, 2007.
The House bill, by contrast, leaves open the possibility that the bill could be extended and adds group life to the lines covered.
Equally important, it introduces a "silo" system for federal involvement in providing a terrorism risk backstop by establishing different levels of government backstop based on the market's perceived ability to provide reinsurance for a particular line.
For example, the government's responsibility would be greatest for claims resulting from a nuclear, chemical, biological or radiation attack. Workers' compensation would also have a high government backstop.
In announcing the vote, Sen. Shelby said, "I commend the Senate's passage of S. 467, the Terrorism Risk Insurance Extension Act of 2005."
Noting that the bill was the result of bipartisan efforts, and passed out of the Senate Banking Committee without objection, Sen. Shelby added, "If enacted, this legislation will satisfy the short-term needs of the insurance industry while promoting the development of private market solutions.
"I remain committed to working with the House and the administration to pass an extension that reflects the balanced principles outlined in this bill."
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