The Legislative and Political Newsletter of the 
MN Independent Insurance Agents & Brokers Association

December 23, 2014
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Implications of the Expiration of TRIA 

With Congress adjourned for the year without extending the Terrorism Risk Insurance Act (TRIA), the program will expire on December 31st. The below document lays out some of the potential marketplace implications due to Congressional inaction.

How We Got Here

In another example of Washington, D.C. gridlock, on Tuesday, December 16, 2014 the U.S. Senate surprised the insurance marketplace and adjourned for the year without extending TRIA. This move was all the more surprising because TRIA enjoyed broad bipartisan support in both chambers of Congress. Only days earlier the U.S. House of Representatives had passed S. 2244, the "Terrorism Risk Insurance Reauthorization Act," which would have extended TRIA for six years with an overwhelming bipartisan vote of 417 - 7 and earlier this summer the Senate had already passed a similar TRIA bill by a 93-4 vote. 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. Efforts are already 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.


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