Insuring against the wide range of potential terrorist attacks is a challenge for the property and casualty industry. It can be difficult to predict both the frequency and severity of any incidents, and the associated costs are often extremely high.
In part due to these issues, the federal government implemented a financial backstop to protect consumers and businesses from the monetary effects of a terrorist attack. Called the Terrorism Risk Insurance Act, the existing legislation is up for expiration at the end of the 2014 calendar year. Over the past several months, lawmakers and members of the insurance industry have talked at length about an extension. Now, it appears that a new bill is gaining momentum in Congress.
TRIA bill announced by House
Members of the U.S. House of Representatives recently announced a new TRIA extension. Unveiled in the middle of June, this legislation is different than other past proposals, and has gained support from members of Congress and those in the property and casualty insurance industry.
According to Insurance Journal, the bill would prolong the TRIA program for an additional five years, as well as make other key changes to its language. For example, insurer co-pay would tick up to 20 percent, and legislators would create a separate program within TRIA to address nuclear, biological, chemical or radiological attacks. Even though many people view the announcement as good news, not every TRIA change has been a welcomed addition.
The House bill proposes an increase to the program's trigger from $100 million to $500 million, and this specific alteration has received criticism within the property and casualty industry.
P&C insurers express support for bill
Despite this specific complaint – and others – with the language of the legislation, many members of the property and casualty insurance industry have viewed the new bill as a positive.
Nat Wienecke, senior vice president, federal government relations at the Property Casualty Insurers Association of America expressed support for the bill in a recent statement. He stated that PCI praises the bill's main backers in the House Financial Services Committee, as well as several of the key changes announced to TRIA.
"The legislation aims to protect taxpayers and preserve America's economic resiliency plan in response to catastrophic attacks against our country, while acknowledging the private sector's limitations in predicting the frequency of attacks and severity of attacks," he said in the statement.
Overall, the advancing discussion around TRIA could be seen as a positive for consumers, businesses and the insurance industry as a whole.
