On July 17, 2014, the Senate passed the Terrorism Risk Insurance Program Reauthorization Act of 2014, extending the original Terrorism Risk Insurance Act (“TRIA”) for an additional seven years. If the bill is ultimately signed into law, it will mark a victory for Senator Schumer, who introduced the original version of the bill in April of this year, as well as many industry participants who have been advocating for an extension of TRIA in order to provide clarity and stability with respect to terrorism risks.
There are a few substantive differences between the language of the original TRIA legislation and the current extension bill. In particular, the co-pay for insurers before government funding is triggered has been raised from 15% to 20%, and mandatory recoupment has been elevated from $27.5 billion to $37.5 billion to be phased in over the next five years. In addition, the bill calls for the establishment of the National Association of Registered Agents and Brokers (“NARAB”), as well as the establishment of an advisory committee that would investigate means to roll back the government’s involvement in terrorism and risk insurance.
Attention now moves to the House, which currently has its own version of a TRIA extension bill under consideration which also includes the establishment of the NARAB. The House currently proposes to extend TRIA for only five years, and there is debate as to whether to limit such coverage to nuclear, biological, chemical and radiation risks. For further analysis of the NARAB provisions of the House bill, please visit our blog here.