R Street encouraged by House bill on terrorism insurance
WASHINGTON (June 12, 2014) – The R Street Institute welcomes today’s introduction of the TRIA Reform Act of 2014, legislation that would make significant, positive changes to the federal Terrorism Risk Insurance Program.
Sponsored by Rep. Randy Neugebauer, R-Texas, the bill would extend the program for five years, but with greater industry liability and less involvement on the part of the taxpayers. The House Financial Services Committee has scheduled a mark-up session for the measure the morning of June 19.
The bill would raise the program trigger for all non-nuclear, biological, radiological and/or chemical events from $100 million to $500 million by the end of 2019. It also increases the assessment rate to compensate taxpayers for the value of their TRIA investments from 133% to 150%. The bill addresses insurance industry concerns by establishing a fixed, 90-day timeline for certification of acts of terrorism.
“This legislation, while it doesn’t go as far as we may have liked, is an improvement over the Senate bill in terms of shifting more risk from taxpayers onto the private sector,” said R.J. Lehmann, R Street senior fellow. “Among other items, it would raise the trigger level for conventional terrorism events to $500 million. These are the sorts of events and the levels of coverage for which private reinsurance is already available, and this change will encourage more firms to enter the market.”
The Senate Banking Committee passed its version of legislation on June 4. It extends the program for seven years. Both bills reduce the federal share of losses from 85 percent to 80 percent.
Lehmann cautioned that even more changes would benefit the program and taxpayers considerably.
“As the House moves forward to consider this legislation, we still would encourage members to consider other changes. In particular, we feel the Terrorism Risk Insurance Program could withdraw coverage for commercial liability insurance,” he said. “As it stands, current policy in that area amounts to a federal subsidy for firms to be reckless in their preparation for terrorism events.”
