Important For Agents To Determine How All Of Their Company Partners Plan To Respond As January 1 Approaches

 

Despite a grassroots lobbying effort by Big "I" members throughout the country, including Nebraska, it is now common knowledge in the industry that the U.S. Senate did not pass  S. 2244, which would have extended the "Terrorism Risk Insurance Reauthorization Act" (TRIA) and made needed reforms to agent licensing. This legislation passed the U.S. House of Representatives by an overwhelming vote of 417-7, but was not voted on in the U.S. Senate before it recessed for the holidays.  

 

While there is plenty of blame to go around, at the end of the day Senate leadership refused to stay in town to overcome the objection of one Senator: Senator Tom Coburn from Oklahoma who is retiring at the end of the year. Senator Coburn objected to the NARAB II agent licensing provision which was also included in the TRIA bill and had already been overwhelmingly passed in the House. While Senator Coburn had a "hold" on the legislative package, this could have easily been overcome by Senate Democrat leadership if they had chosen to devote the necessary floor time by invoking cloture and staying in town several additional days. The Big "I" has already joined efforts underway to convince Congress to act quickly in the 114th Congress to begin early next year, and initial indications from House and Senate leadership are that TRIA will be a high priority.

Insurance Marketplace Impact

According to the Insurance Information Institute (III), "market stability in terms of both pricing and availability of terrorism coverage, as well as the ability to maintain adequate and expanding levels of capacity over time, are contingent on the continued existence of TRIA. Without a federal backstop, terrorism risk insurance would almost certainly become less available. Any coverage that would be available likely would be more costly and/or limited in scope." In fact, in 2013 and 2014, Marsh conducted interviews in which they found that approximately 48 percent of property insurers said they would not offer stand-alone terrorism coverage should the program expire.

 

Agents are already receiving notices from individual insurers on their plans for handling terrorism insurance post 12-31-14 - decisions will be made on an insurer by insurer basis, and in many cases a policy by policy basis.  It is important for agents to immediately determine how all of their company partners are planning to respond as January 1, 2015 approaches. The effect of TRIA's lapse is expected to be felt the most in the workers compensation market.

 

Read the complete analysis from IIABA - your national Big "I".