July 17, 2014
U.S. Senate Overwhelmingly Passes TRIA Reauthorization Bill; Bipartisan Bill Would Renew Vital Program for Seven Years
With a bipartisan vote of 93-4, the U.S. Senate today overwhelmingly passed legislation to reauthorize the Terrorism Risk Insurance Act (TRIA) for seven years through 2021, while making several modifications to the program. TRIA was established in the wake of 9/11 to provide a federal risk-sharing mechanism to help insure against losses resulting from foreign and domestic terrorist attacks. The bill, S. 2244, the “Terrorism Risk Insurance Program Reauthorization Act of 2014,” was initially introduced in April by several of the Senate Committee on Banking, Housing & Urban Affairs (Senate Banking Committee) members, including Senators Charles Schumer (D-NY), Dean Heller (R-NV), and Mark Kirk (R-IL), and was passed by that committee last month by a unanimous vote of 22-0.
The Coalition to Insure Against Terrorism (CIAT) representing the insurance policyholder community, and which NAREIT is a founding member, sent a letter to all senators prior to the vote endorsing S. 2244 and encouraging its adoption. Similar to comments they made before the Senate Banking Committee, Committee Chairman Tim Johnson (D-SD) and Ranking Member Michael Crapo (R-ID) made strong statements on the Senate floor in support of adopting the bill in order to reauthorize TRIA before it expires at the end of 2014. They both agreed that passage of S. 2244 would achieve the right balance within TRIA that promotes economic growth and provides certainty for commercial property development and job creation across the country while increasing taxpayer protection in the event of a terrorist attack.
As adopted by the Senate, in addition to reauthorizing TRIA for seven years through 2021, S. 2244 would incorporate two principal modifications to the program:
The first change would incrementally increase the insurers’ co-pay beginning in 2016 from the current level of 15 percent to 20 percent (i.e., the government would cover 80 percent of each insurer’s losses instead of 85 percent) in the event of a terrorist attack that triggers TRIA into effect.
The second modification would increase the aggregate amount of overall insured losses for which repayment of any federal share is mandatory from the current level of $27.5 billion to $37.5 billion incrementally over a five-year period.
Several relevant amendments were offered and approved during consideration on the Senate floor Thursday, but only one amendment offered by Senator Tom Coburn (R-OK), a member of the Senate Banking Committee, would have made an additional change to the existing program. His amendment, which the Senate defeated, 49-47, would have modified the current mandatory recoupment feature of TRIA and required that any federal payments made after a terrorist event occurs to be completed within 10 years of the attack, rather than within 10 years of the Act’s reauthorization. The Coburn amendment was defeated, with CIAT’s support, because it would have resulted in a budget score for S. 2244 that increased the federal deficit. As approved by the Senate, S. 2244 would raise revenues and reduce the deficit by an amount of approximately $460 million.
NAREIT applauds Chairman Johnson and Ranking Member Crapo for their leadership in crafting a reauthorization proposal that garnered such tremendous bipartisan support in the Senate. The reauthorization would continue to protect taxpayer interests and limit the government’s exposure to only the most extreme terrorist events while preserving the availability of terrorism risk insurance in the current marketplace. In addition, NAREIT appreciates the many comments made in support of S. 2244 during Tuesday’s floor consideration, especially those from Senators Charles Schumer (D-NY), Chris Murphy (D-CT) and Dean Heller (R-NV), whose overall support for TRIA reauthorization proved essential to securing S. 2244’s passage.
“This is a significant step in the right direction as we work to reauthorize TRIA,” said NAREIT president & CEO Steven A. Wechsler. “The House should follow the Senate’s lead and move quickly to bring a comparable proposal to a vote. Only then can Congress complete the process and get legislation to the President’s desk. We will continue to work with the House and Senate to help move this program, which is so critical to U.S. economic stability and security, toward final reauthorization.”
The Senate will now wait for the House of Representatives to consider its own TRIA reauthorization proposal, H.R. 4871, the "TRIA Reform Act of 2014," which passed the House Financial Services Committee on June 20, and which may occur within the next two weeks prior to the August congressional recess period. Assuming that occurs, NAREIT anticipates a House-Senate conference committee will convene in some manner later this fall to begin reconciling the differences in the two bills before a final proposal can be presented to both the House and the Senate for approval, and then sent to President Obama for signature before the year concludes.
If you have any questions or comments, please contact Robert Dibblee, NAREIT's SVP, government relations, at email@example.com.