Late yesterday afternoon, the House Financial Services Committee approved an amended version of the Terrorism Risk Insurance Revision and Extension Act of 2007 (“TRIREA”) by a vote of 49 to 20. The proposed legislation had recently been approved by the House Financial Services Committee's Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. We previously discussed TRIREA’s progress in this space here and here.
In a move that is likely to face opposition from the executive branch, the Committee amended TRIREA to extend the federal risk insurance program for 15 years, rather than the 10 years provided by earlier versions of the Act. In response, several Republican members of the Committee expressed concern that the Act as amended would face a veto by President Bush, as the administration has made clear that it views the program as a temporary, rather than a long-term or permanent solution and is opposed to even a 10 year extension.
Other amendments include a provision that would exempt insurers with annual direct premiums of less than $50 million from having to offer coverage for nuclear, biological, chemical and radiological (“NBCR”) attacks if they make a showing that doing so jeopardizes their solvency. This change seeks to allay fears that requiring NBCR coverage as a prerequisite for inclusion in the program will preclude small and medium-sized insurers from participating. Finally, the Committee passed an amendment tying the size of insured losses required to trigger the backstop to the rate of inflation.
TRIREA will be considered by the full House sometime next month after its August recess. We will continue to provide updates as the situation develops.