June 3, 2014
Bipartisan TRIA Bill Would Provide a Seven-Year Renewal of Vital Program; NAREIT Welcomes the Legislation
On a bipartisan vote of 22-0, the Senate Committee on Banking, Housing and Urban Affairs today unanimously passed a bill 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 by several Committee members, including Senators Charles Schumer (D-NY), Dean Heller (R-NV) and Mark Kirk (R-IL).
In addition, Committee Chairman Tim Johnson (D-SD) and Ranking Member Michael Crapo (R-ID) co-sponsored the bill after it was introduced. Both of them made strong statements in support of the bill and the need to reauthorize TRIA before it expires at the end of 2014 during Tuesday's Committee meeting. In a joint statement after the Committee's action, Chairman Johnson stated that the 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." Ranking Member Crapo commented that the Committee had worked to develop a TRIA program that "will help limit the economic damage of any future terrorist attack, make our economy more resilient and increase taxpayer protection. I thank the Chairman…for developing a balanced extension to the program."
The Coalition to Insure Against Terrorism (CIAT) representing the insurance policyholder community, and of which NAREIT is a founding member, issued a statement strongly supporting the Committee's adoption of S. 2244. Prior to the Committee's action, CIAT forwarded a letter to all Senate Banking Committee members urging their support of the bill.
As adopted by the Committee, 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 amendments were offered on Tuesday to make additional changes to the existing program but were later withdrawn.
NAREIT is pleased the Senate Banking Committee has adopted legislation reauthorizing TRIA without upsetting the delicate balance inherent in the current program that protects taxpayer and limits the government's exposure to only the most extreme terrorist events, while preserving the availability of terrorism risk insurance in the current marketplace. "TRIA has played a critical role over the past dozen years. Without it, our economy – and American jobs – would be exposed to the negative consequences from a terrorist attack just as they were after 9/11," commented NAREIT President & CEO Steve Wechsler. "NAREIT commends Chairman Johnson, Ranking Member Crapo and the full Senate Banking Committee for taking this positive step today to move the reauthorization of TRIA forward before the end of the year by the 113th Congress."
S. 2244 will now be sent to the full Senate for consideration, possibly prior to the August congressional recess period. In the meantime, NAREIT anticipates the House Financial Services Committee will release its own proposal reauthorizing TRIA in the coming weeks.
If you have any comments or questions, please contact NAREIT's senior vice president of government relations, Robert Dibblee, at email@example.com.