HOUSE APPROVES TERRORISM BACKSTOP EXTENSION
Big “I” hopes for speedy House-Senate conference, passage before Dec. 31 expiration
WASHINGTON, D.C., Dec. 7, 2005—With today’s approval of a terrorism backstop extension by the House, the Independent Insurance Agents & Brokers of America (the Big “I”) is now pushing for a speedy House-Senate conference to produce and pass unified legislation.
A new backstop is needed to help insure against catastrophic terrorism losses in place of the Terrorism Risk Insurance Act (TRIA), which expires Dec. 31. The House bill, the Terrorism Risk Insurance Revision Act, is sponsored by Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee Chairman Richard Baker (R-La.). Its passage this week is the product of cooperation between Baker, House Financial Services Committee Chairman Mike Oxley (R-Ohio) and House Judiciary Committee Chairman James Sensenbrenner (R-Wis.).
“The Big “I” has consistently supported the continuation of the current terrorism insurance backstop or a modified one, and it has noted in testimony before Congress that action is needed before the Terrorism Risk Insurance Act (TRIA) expires,” says Big “I” CEO Robert Rusbuldt. “This legislation is crucial for the business customers of independent agents and brokers, for continued economic growth in America, and for our nation’s economic security.”
“We are now on the cusp of keeping a much-needed terrorism backstop in place,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “We are very confident that an extension can make it through conference and to the President’s desk before the end of the year, and we will do everything we can to help accomplish this goal. We thank Chairmen Baker, Oxley and Sensenbrenner, as well as Ranking Members Barney Frank (D-Mass.) and Paul Kanjorski (D-Pa.), for working together to get this done in the House in a timely manner.”
In addition to extending the federal backstop on a short-term basis, the House bill helps address the long-term need for coverage. It will encourage risk-sharing mechanisms and authorize capital-reserve accounts that will help the market increase its own capacity and phase out federal involvement eventually. A public-private, nine-member commission and several studies are proposed in the bill, including a Big “I”-supported natural-disaster study.
The Senate bill sets the floor for “triggering events” at $50 million in 2006 and $100 million in 2007. It also requires that insurers make coverage available to policyholders in all lines covered by the program, and sets individual insurer retention levels at 17.5 percent of premiums collected in TRIA-covered lines in 2006 and 20 percent of such premiums in 2007. The House bill sets various premiums for differing types of coverage.
The Big “I” has always seen terrorism coverage as a national issue, and it notes that the availability and affordability of terrorism insurance is a business customer problem throughout the nation. In fact, take-up rates under TRIA have continued to grow across the country, and IIABA members have seen terrorism coverage purchased by a variety of interests, from small towns in Mississippi to small and large businesses in New York City.
“Both the House and Senate bills address deductibles and triggering events, and these parameters will help avert devastating consequences on smaller businesses and our members. This is good for the economic health of Main Street America,” says Brendan Reilly, director of federal government affairs. “Our members are pleased that both chambers of Congress have moved forward on this, and we will work with senators and representatives to help get a unified bill out of conference and onto President Bush’s desk before year’s end.”
Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
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