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RED ALERT: TRIA Extension Passes Senate, to be signed into law

CIAB, January 8, 2014

A Red Alert from The Council of Insurance Agents & Brokers | Jan. 8, 2015

The U.S. Senate overwhelmingly voted to enact a six-year extension of the Terrorism Risk Insurance Act.  The act is identical to the legislation approved yesterday by the U.S. House of Representatives.  It includes our long-sought NARAB provision to create an interstate agent/broker licensure clearinghouse.  The vote was 93 to 4, with only the following senators voting no: Marco Rubio (R-FL), Elizabeth Warren (D-MA), Bernie Sanders (I-VT) and Maria Cantwell (D-WA).

One of the biggest questions we have received today has to do with whether the Act is retroactive to January 1. To that end, the following statement was made in the House of Representatives by Rep. Randy Neugebauer, the most recent chairman of the Insurance Subcommittee of the House Financial Services Committee:    “H.R. 26 reauthorizes the Terrorism Risk Insurance Act (TRIA) for six years, through December 31, 2020. However, since TRIA technically expired on December 31, 2014, there is a short time gap causing some market complications and uncertainty regarding terrorism insurance coverage, disclosures and forms during the lapse. Many commercial insurance contracts include a conditional exclusion that some terrorism insurance coverage would be terminated if the TRIA backstop expired. With this TRIA bill, Congress intends to ensure that there is no gap in coverage, the exclusions will not need to be triggered, and policyholders and insurers do not have to negotiate new coverages. I want to make clear that the Congressional intent and the correct reading of the revised statute is that TRIA’s reauthorization applies its coverage retroactively and continuously without a lapse so that there will be no program gap.  I anticipate that the Treasury Department will issue guidance and regulations implementing the reauthorized TRIA program retroactively to January 1, 2015, including an appropriate time period for insurance providers to make available terrorism insurance coverage and provide appropriate disclosures pursuant to the new requirements as necessary. Likewise, I anticipate that state insurance regulators will expeditiously address any form and rate requirements, as they did after the 2005 and 2007 TRIA reauthorizations. To minimize any consequences from TRIA’s temporary lapse, all the terrorism insurance stakeholders need to work together expeditiously to restore the full protections of TRIA.”