Renewal of the federal terrorism risk insurance program established by the Terrorism Risk Insurance Act of 2002 ("TRIA") moved one step closer to reality yesterday when the Senate Banking, Housing and Urban Affairs Committee approved legislation seeking a seven year extension of the program by a 20-1 vote.
The Program, which is set to expire at the end of this year, was previously renewed in 2005 (by the Terrorism Risk Insurance Extension Act of 2005, or "TRIEA"). The Senate’s Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA"), which seeks to extend the program for another seven years, is the result of a compromise reached last weekend between Committee Chairman Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., the Panel’s ranking minority member.
Yesterday’s vote comes three weeks after the House of Representatives overwhelmingly approved its version of extension legislation, the Terrorism Risk Insurance Revision and Extension Act of 2007 ("TRIREA"), by a 312-110 vote. The two bills differ in several significant ways. While TRIREA proposes to include coverage for group life insurance, TRIPRA does not. TRIREA seeks a fifteen year extension of the terrorism risk insurance program while TRIPRA proposes a seven year renewal term. TRIREA requires program participants to provide coverage for nuclear, biological, chemical and radiological attacks while TRIPRA does not. Both bills would provide coverage for events of domestic terrorism. Working in TRIPRA’s favor is the fact that the Bush administration favors its terms and has stated that it would not oppose the Act’s passage. On the other hand, the Administration has voiced strong opposition to TRIREA, threatening a veto of any extension legislation containing its terms. Given the differences between the two proposed acts, there is still a lot of work to be done before final extension legislation is ready for the President’s consideration. The next step in the process is a vote on TRIPRA by the full Senate, which, according to press reports, could take place in the next week.
We will continue to monitor TRIA-related developments and provide updates at InsureReinsure.com.