The new U.S. House Terrorism Risk Insurance Act extension bill will go to a vote Friday morning, now, in the House Financial Services Committee (HFSC) after a long debate Thursday, with a variety of amendments added and withdrawn into the afternoon.
The bill , H.R. 4871, appears to poised to move to the floor along party-line votes, although both Democrats and some Republicans have qualms about some of the provisions. If it does not pass, the HFSC leadership will allow “a clean,” half-year extension only to go to the House Floor.
However, all was studied politeness and patriotism at the mark-up today as Committee Chairman Jeb Hensarling,R-Texas, thanked members for voicing their opposing views while noting that the bill has been debated for over a year, and all sides heard. Carolyn B. Maloney (D-NY) was among the first out with a statement from the Democrats opposing the bill, even though she sad it was a “significant improvement over previous drafts.” Her concerns are increasing the trigger for the government backstop from $100 million to $500 million; and treating “conventional” terrorist attacks differently from so-called “NBCR attacks” – nuclear, biological, chemical, and radiological attacks.
However, the increase to $500 from $100 million is 500%, not the incremental percentage changes of earlier increases in industry cost amounts, several lawmakers on both sides of the aisle argued. Hensarling said that the bill, sponsored by Rep. Randy Neugebauer, R Texas, chair of the Housing and Insurance Subcommittee, is not an end to TRIA at all, as seems to be the theme among some of his his colleagues, as he said. “To amend it is not to end it, he said.
But with the current legislation, “You have a program but no one can afford it,” said Rep. Michael Capuano, D-Mass. Rep. David Scott, D-Ga., even went as far as to suggest a $500 million trigger would be fodder for terrorists now watching Congress’ every move on TRIA, including one that would be “foolish” and “irresponsible” by placing the U.S. “on its knees” in its ability to regain its footing and rebuild after a terrorist event by effectively getting rid of the federal backstop, as he believes the legislation’s higher trigger amount would do.
One significant addition is the inclusion of NARAB II, a non-profit clearinghouse, the National Association of Registered Agents and Brokers (NARAB) that would streamline non-resident market access for insurance agents and brokers by allowing full multi-state uniformity and reciprocity while keeping state market conduct authority “to police bad actors,” as the National Association of Insurance Commissioners (NAIC) puts it. Rep. Ed Royce, R-Calif., did question the need with an amendment for a review of NAIC governance pursuant to NAIC’s role in NARAB 2, and its authority to recommending board members to the President, who would make the appointments. Another attempted amendment was the addition of the so-called Collins Amendment fix.
Like the FSOC, the Collins (Sen. Susan Collins, R-Maine) Amendment is a part of the Dodd Frank Act (DFA.) This amendment, DFA Section 171, does require minimum capital standards on all thrifts and bank holding companies as well as on nonbank systemically important financial institutions regulated by the Federal Reserve.
The fix offered by Rep. Gary Gene Miller, R-Calif, and Rep. Carolyn McCarthy, D-N.Y., and supported by the Senate by and large, would free insurers as such from the minimum leverage capital requirements and minimum risk-based capital requirements on a consolidated basis.
For further coverage, see http://www.carriermanagement.com on Friday with information on the final House vote on TRIA and on legislation to put the brakes on, and allow more oversight of, the U.S. Financial Stability Oversight Council (FSOC.)
“We look forward to the Committee reconvening tomorrow to vote on the TRIA reauthorization provisions pending before the Committee. We are also very pleased that NARAB II was adopted by the Committee and will be included in the House TRIA Reform Act,” stated Nat Wienecke, senior vice president, federal government relations, of the Property Casualty Insurance Association of America.
Congress passed the Terrorism Risk Insurance Act of 2002 in the aftermath of 9/11 for fear that the lack of available terrorism insurance could harm economic development and since 2002 the market has stabilized, risk management has improved, modeling has advanced, and premiums have decreased by 70%, according to Neugebauer.