TRIA renewal bill not yet whipped and sawed by House

The Terrorism Risk Insurance Act (TRIA) could get a vote Thursday in the Senate as well as the House, although most say that division and discontent, as has been reported, could move the vote until next week.
No one yet is “feeling lucky.”
The Speaker’s office, when contacted early this afternoon said a vote was scheduled Thursday for H.R. 4871, but that is likely premature–observers and staffers say the 218 votes aren’t there yet for the bill that passed out of the House Financial Services Committee under Chairman Jeb Hensarling, R-Tx,  a month ago.

At best, they’ll get the GOP whip count Thursday, and that will determine whether–and then, when–the majority might schedule the vote, said one person familiar with the Leadership’s routine.

“No way,” said another regarding any vote in the Hosue on TRIA this week.

Majority Whip Kevin McCarthy, R-Calif.’s office said there was nothing on the schedule for TRIA as of yet.

In the meantime, where the two versions will meet in terms of their provisions for the program’s extension and trigger threshold is still an open question.

It would bifurcate nuclear, biological, chemical or radiological (NBCR) attack coverage from losses incurred from an attack using conventional (or non-NBCR) materials. In the House bill, which many insurers cannot stomach as-is, the trigger would increase incrementally from $100 million in calendar year 2015 to $500 million in calendar year 2019.
The Senate bill is a seven-year extension maintains the trigger at $100 million and increases the recoupment amount over five years by $10 billion. For more details, see <a href=” CBO score” target=”_blank”>article:
H.R. 4871 would extend TRIA for five years, through Dec. 31, 2019.
The Congressional Budget Office (CBO)  has scored H.R. 4871, estimating that enacting H.R. 4871 would increase budget deficits by about $500 million over the 2015-2024 period. Changes in federal revenues and spending, however, would continue beyond 2024.
Enacting the renewal legislation would lead to additional spending of $250 million and additional revenues of $1 billion after 2024,the CBO estimates. Thus the estimated net budgetary savings after 2024 would be slightly larger than the estimated net budgetary cost between 2015 and 2024, the CBO stated July 15th. The CBO factored in the proposed National Association of Registered Agents and Brokers (NARAB II) reform, as well.
The CBO estimates that after taking into account all revenues and direct spending, enacting H.R. 4871 would lead to a small reduction in deficits over time.
At the same time, the establishment of NARAB, which is to be attached to the House and Senate TRIA bills during a vote now, is facing a sunset provision two years after the first license is issued in a floor amendment added by Sen. Tom Coburn, Md., R-Ok.
Some say it could have been worse and that NARAB otherwise has very strong, bipartisan, bicameral support.
According to one source, Senate supporters of NARAB and TRIA reached an agreement with Coburn where he would agree to a two-year sunset of NARAB – two years after the first NARAB license is issued to an individual after some back and forth on the clearinghouse provision.


Consultant to examine NAIC governance procedures, external and internal relationships

UPDATED 7/16 10:30 am with NAIC education initiative news:

Seven months after Connecticut Insurance Commissioner Tom Leonardi recommended hiring outside consultants to conduct a thorough evaluation of the governance structure of the National Association of Insurance Commissioners (NAIC), its Executive Committee has finally decided to go forward with the move.

The NAIC Executive Committee recently voted unanimously to accept the recommendation from its Governance Review Task Force to hire a consultant to assist in a comprehensive review of NAIC governance, the organization announced July 15.

The Governance Review task Force stated in its draft that the consultant should “compare NAIC’s organizational and governance model with best practices of associations, business or nonprofits that are comparable to NAIC, where practicable.”
The draft scope of work, dated June 13, contemplates a broad review of the NAIC’s organizational structure, committee processes and external engagements with with international bodies, including the International Association of Insurance Supervisors (IAIS), and interactions with federal bodies, including Congress, the Federal Reserve, the Department of Treasury, its Financial Stability Oversight Council (FSOC) and the Federal Insurance Office (FIO), including how NAIC strategy and message are developed.
The hiring committee is made up of some of the NAIC officers such as Pennsylvania COmmissioner Micahel Consedine even as one of the organizational reviews includes analysis of the role and authority of the Executive Committee, NAIC officers, the NAIC CEO and the organization’s management.
Back on Dec. 11, 2013, in a startling passionate letter that went as “viral” as anything the NAIC as an organization had ever been involved in to date, Leonardi blasted the organization for cronyism, acceptance of weaknesses and “so-called leadership.”
Anyone keen to revisit that letter and its colorfully-rendered revelations of NAIC discord and fissures within the ranks from the former CEO and business executive, who is as familiar in Washington and international insurance regulatory circles as he is in Connecticut can read about here and here.  It doesn’t lose its flavor months later.
“We cannot choose our fellow commissioners or always compensate for each other’s weaknesses, but we can make sure that our organization is structured and governed in a way to minimize the negative consequences of those realities,” Leonardi stated in the letter to his fellow state regulators, after detailing a variety of shortcomings and allegedly unprofessional behavior in the NAIC ranks.
The NAIC and Leonardi both have acknowledged in various ways that state insurance regulation is on the line, challenged by contemplated and real federal oversight moves and international pressures.

The 2010 Dodd Frank Act measures are slowly being enacted despite attempts to abridge or curtail them, and international efforts for global  insurance capital  standards have been embraced in a bear hug of the world’s top banking regulators,  threatening to squeeze the state out of state regulation of insurance, according to some insurance sector participants.

The NAIC said it anticipates issuing a request for proposals this week to help selection of a consultant and is targeting early September for the work to begin.
Leonardi, who was shut down in the December NAIC national meeting with his corporate governance proposal by the leadership and others, who decided to table a decision until after the current storm of outrage from Leonardi had subsided, is not part of the selection team.
In 2014 an Executive Task Force was formed and charged with making a recommendation to Executive Committee on whether to retain a consultant.

“I look forward to working with fellow regulators on a fair and open process that will ultimately strengthen the effectiveness of the NAIC and enhance our common mission of consumer protection and state-based industry oversight. Good governance is extremely important to the constituents we serve. It is my hope that the consultant vetted and eventually recommended by President (Adam) Hamm’s subcommittee is one who will deliver world-class expertise to this task and who will be afforded unfettered access to our organization in order to conduct an independent and unbiased review.”

Hamm’s statement acknowledged Missouri Insurance Director John Huff for his leadership on the Governance Review Task Force.
“As in past reviews of NAIC governance, we hope the consultant can assist us in facilitating a thorough evaluation and identifying best practices for us to consider,” stated Hamm, also North Dakota insurance commissioner.
The RFP will be posted on the NAIC website upon issuance, with actual contract with the consultant expected in late August.
Word on the cost or budget for the consultant was not disclosed.
The NAIC makes use of consultants in many areas from technology systems to legal and actuarial support human resources to accounting policies that accepted in 2011 a target operating reserve of 80% to 91%.
To help educate domestic and international policymakers about the actual workings and effectiveness of the U.S. regulatory system, the NAIC proposed, for example, in the 2014 budget, to retain the services of one or more consultants to help generate an educational outreach program intended to raise the awareness of the state-based system of insurance regulation in the U.S.

Interestingly, the nAIC announced a day later, July 16, that it had just launched this educational initiative, called  ‘Protecting the Future…’

Calling it unprecedented, the nAIC is deploying it in  Washington,  Brussels, the capital of the European Union; and in Basel, Switzerland, the seat of the Financial Stability Board (FSB) for the G-20.

“It is a critical time for state regulators as some federal officials and global regulators are seeking unprecedented authority over American insurance markets, including the imposition of bank-centric regulation on insurance companies,” the NAIC stated, claiming state regulation  has  a nearly 150 year history, even during the 2008 financial crisis, of protecting policyholders and helping to prevent an even deeper economic downturn.

With this  education initiative in mind, the 2014 budget projected about $12.220 million for outside consultants, down from $15.69 million in 2012 and about even with 2013 budget number amount. The budget did not appear to include the corporate governance consultant in its projections.
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