Since 2002, the Terrorism Risk Insurance Act has been reauthorized three times, most recently in 2015 through the Terrorism Risk Insurance Program Reauthorization Act (the 2002 legislation and subsequent reauthorizations, collectively TRIA). The current reauthorization is scheduled to expire on December 31, 2020.
Complex commercial insurance and real estate development negotiations often have long runways that last months or years. As a result, there has been broad-based pressure on Congress to deliver early certainty about whether TRIA will be reauthorized after 2020, and if so, what changes might occur in the program. In June 2019, the Senate Banking, Housing and Urban Affairs Committee held a hearing to consider reauthorization of TRIA. In October 2019, the House of Representatives Financial Services Committee unanimously approved reauthorization legislation, and the full House passed it on November 18, 2019, by a vote of 385 to 22 (H.R. 4634). On November 20, 2019, the Senate Banking, Housing and Urban Affairs Committee by voice vote unanimously passed out of Committee TRIA reauthorization companion legislation to the House bill, S. 2877. The reauthorization is expected to be passed into law and signed by the President. The timing of final legislative and presidential action is unclear at this time.
The pending reauthorization legislation addresses several issues of particular interest to the insurance industry, most notably the length of reauthorization and the financial backstop trigger levels.
- Financial trigger levels remain at 2020 levels
- Seven-year reauthorization, until December 31, 2027
- New governmental studies and reports regarding availability and affordability of terrorism risk insurance, terrorist attacks on places of worship and cyber terrorism
In addition to the studies expressly required under the reauthorization legislation, there are several issues to watch during this next TRIA authorization period. There is increasing discussion about the need to look at coverage for nuclear, biological, chemical and radiological (NBCR) events, and about the impact of a terrorist attack on workers’ compensation and other lines of coverage not addressed by TRIA. The timing of mandatory federal recoupment has also begun to receive policy attention. We expect that the annual joint federal and National Association of Insurance Commissioners (NAIC) data calls on terrorism risk insurance will continue. Look for both the federal government and the NAIC to publish additional studies and recommendations over the next seven years.