The US Senate Banking Committee approved a bill Tuesday that would extend the federal government’s Terrorism Risk Insurance Program for another seven years. The measure was backed by both Republicans and Democrats, and could come up for a vote in the full Senate as early as this month.
"Developers and business owners embarking on multiyear, multimillion- or billion-dollar construction projects need to be certain they can insure their investments," said Sen. Charles Schumer, who helped broker a deal to pass the legislation.
The program is not the one those in the insurance industry are used to, however. New provisions include a $2 billion annual increase in an industrywide assessment on property/casualty insurance policies, essentially raising insurers’ copay after the deductible to 20% from 15%. The government will then cover 80% of each insurer’s additional losses.
If the law passes, the deductible increase will be phased in over the next five years.
“This seven-year extension of TRIA will continue to help promote economic growth and provide certainty for commercial property development and job creation across the country while protecting the taxpayer,” said Banking Committee Chairman Tim Johnson after the vote. “With such a substantial bipartisan vote out of the Banking Committee, I thank my colleagues on both sides of the aisle and plan to continue working with them to move the bill through the Senate in a timely manner.”
The measure passed unanimously, 22-0, and faces a divided House of Representatives if passing the full Senate.
The House of Representatives is currently embroiled in a debate over the continued necessity of the program, though Rep. Randy Neugebauer—leader of the Subcommittee on Housing and Insurance—announced recently his committee hoped to have a proposal ready this month.
“Just to let you know, we are working very hard on this issue,” Neugebauer said in late May. “Our goal is sometime in June to put out a bipartisan bill on TRIA, out of this committee, and put it in the hands of the leadership and look at passing it on the House Floor.”
TRIA, initially passed after the September 11 terrorist attacks, is set to expire on Dec. 31, 2014. The program has already been renewed twice, and many in the Republican contingent of the House subcommittee question its continued usefulness.
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