President Bush Signs

The final bill (H.R. 2761–The Terrorism Risk Insurance Program Reauthorization Act of 2007) also leaves out two other provisions sought by the House. One would have cut the current trigger for federal involvement in paying claims for a terrorist attack from $100 million to $50 million, while another would have added group life insurance to the program.

Sen. Chris Dodd, D-Conn., who chairs the Senate Banking Committee, thanked the House for passing the Senate's more modest extension bill. "It will help to protect our nation's workers and businesses from the risk of terrorism, and help to ensure that our economy is able to thrive and create jobs," he said. "This is a carefully crafted, strong and balanced bill that the president has said he will sign into law."

However, while the House reluctantly acquiesced by rubber-stamping the Senate's bare-bones version, Rep. Gary Ackerman, D-N.Y., introduced a new Terrorism Risk Insurance Act–H.R. 4721–to be considered in 2008, which includes the so-called "reset" mechanism strongly supported by House Democratic members but dropped from the final version sent to President Bush.

That provision is designed to increase terrorism insurance capacity for properties in urban areas seen as prime targets, such as New York City.

However, the Council of Insurance Agents and Brokers, in a note to members sent out after the House passed the Senate's scaled-down version, said: "It is our belief that [Ackerman's] legislation is highly unlikely to pass."

Despite the ill feelings stemming from the "take-it-or-leave-it," no-negotiation attitude of the Senate, the final bill passed the House overwhelmingly, 360-53.

The Terrorism Risk Insurance Program Reauthorization Act of 2007 effectively extends the current program through 2014, with the chief difference being the addition of domestic terrorist events.

But House Democrats did not accept the inevitable before taking some shots at the Senate–especially Sen. Richard Shelby, R-Ala., ranking minority member of the Senate Banking Committee, who was insistent the Senate version would have to carry the day.

Both Rep. Barney Frank, D-Mass., chair of the House Financial Services Committee, and Rep. Ackerman railed against the lack of communication with the Senate.

"Santa Claus is not going to give America terrorism risk insurance for Christmas, and we don't live with the Easter Bunny in the Senate's candy-land, where catastrophic risk can be comfortably ignored," said Rep. Ackerman. "Saying, 'the market will provide,' doesn't make it true."

"I do regret the breakdown in the U.S. Senate of the legislative process," said Rep. Frank, who in late October vowed not to allow the Senate to bully the House into accepting its version of the bill at the last minute–which is effectively what ended up happening. "We were told the senior Republican on the committee, the gentleman from Alabama, simply refused to meet with us," he added, referring to Sen. Shelby.

"If the Senate had voted against the reset mechanism, I would've been disappointed, but I would have said, 'well, that's the way it works,'" he said, asking members of the Senate "not to put themselves in a position where there is a one-person veto."

During the debate on the final bill, Rep. Spencer Bachus, R-Ala., ranking minority member of the House Financial Service Committee, called it a good compromise.

"While it is not a perfect bill, the Senate's TRIA extension is a reasonable, bipartisan compromise that will ensure the continued vitality of our commercial insurance markets operating under the threat of global terrorism," he said.

He called the seven-year extension "fiscally responsible," and said he supported it because it "otherwise limits and improves taxpayer protections and prevents further intrusion by the government into this market-based program."

The only other change to the current legislation was a provision that would mandate the Government Accountability Office to conduct two studies and make recommendations to Congress.

One study would examine the issue of risk posed by NBCR attacks, and the other would examine capacity restraints in certain regions of the country, such as lower Manhattan.

In addition, to comply with congressional budget requirements, the extension mandates that all commercial policyholders would have to pay higher annual surcharges than under current law for a medium-sized terrorism event.

Funds provided by the Treasury after a terrorist attack are recouped through a 3 percent annual surcharge on policyholders up to $27.5 billion. After that, the secretary of the Treasury has an option to require repayment.

For a terrorist attack that occurs between January 2008 and December 2011 requiring reimbursement based on the current formula, the money must be repaid by the end of the 2012 fiscal year.

So, for example, for an event in January 2008 that requires recoupment, the required amount of money must be paid by the end of the 2012 fiscal year. For an event in December of 2011 that requires recoupment, the required money must also be paid by the end of the 2012 fiscal year.

Thus, the worst-case scenario is that there would be only a nine-month period in which to reimburse the government.

For an event after December 2011 (anything from January 2012 on) that requires reimbursement, the money must be paid by the end of the 2017 fiscal year.