Update: Terrorism Insurance Reauthorization and Transportation Industry

Update: Terrorism Insurance Reauthorization and Transportation Industry

In April, we spoke about the looming expiration of the government-backed Terrorism Risk Insurance Act (TRIA), set for December 31^st, 2014. Just last week, there was some progress made on this front with the Senate voting to extend TRIA. Senators voted 93-4 to extend the program through 2021, allowing the federal government to pay for a portion of damage arising from attacks costing more than $100 million. The Senate bill also increases the co-payment for private insurers from 15 percent to 20 percent. This news was welcomed by the insurance industry with various insurers and associations indicating the move by the Senate is a positive step toward renewing the bill. Businesses also welcomed the news, as without TRIA’s reauthorization, companies – including logistics service providers and the transportation industry – would be unable to purchase insurance coverage for terrorist acts. This would be, of course, devastating for all those involved in the supply chain and our economy as a whole.

Still More Work to Do

The Senate bill differs in a number of ways from a House bill on TRIA that passed out of committee last month. The House version would renew TRIA for only five years and further cut back on government involvement in the program. It calls for gradually increasing the program trigger for all non-nuclear, biological, radiological, and/or chemical (NBCR) events from $100 million to $500 million by 2019, effectively phasing out the program for non-NBCR events.

The difference in both bills means that more work still needs to be done to reconcile the two versions and get the program extended. Some of the Republican leadership in the House Financial Services Committee, however, issued statements on Thursday, July 18^th after the Senate’s version passed, indicating that Congress would have to accept either a slimmed-down version of the bill this year, no bill at all, or an 8-month extension of the program that would be taken up next year.

Representative Jeb Hensarling, chairman of the House FSC, and Representative Randy Neugebauer, chairman of the Housing and Insurance Subcommittee of the FSC, both said they would stretch out the process while they educate members of the House on their version of the bill. “Essentially it looks like TRIA’s not going to be considered in July,” said a Neugebauer aide, as Congress recesses for the remainder of the summer.

Reauthorization of TRIA is critical for several reasons: It facilitates a robust private market for terrorism risk insurance that can provide potential policyholders with affordable policies and insurance against terrorist attacks. TRIA also protects taxpayers and fosters economic resiliency following a terrorist attack.

Roanoke Trade specializes in the transportation and logistics industry and has the expertise, experience and insurance solutions to protect your operation, employees and financial assets along with the goods in your care and custody for the clients. As we have in the past, we will continue to keep you updated as developments progress on TRIA reauthorization.

Sources: Insurance Journal, Advisen, Property/Casualty 360