8 January 2015 Insurance

House passes TRIA; landscape still uncertain

The House of Representatives has again voted to reauthorise the Terrorism Risk Insurance Act (TRIA), although the question remains on whether it will face opposition in the Senate.

The bill, which would extend TRIA until the end of 2020, was passed by an overwhelming majority of 416 votes to five votes.

TRIA expired in December last year, despite the House passing essentially the same bill on December 10, 2014.

Republican Tom Coburn from Oklahoma was a major obstacle as he objected to a part of the bill that created a semi-federal licensing programme for insurance agents, permitting them to sell across US state lines.

Rating agency Standard & Poor’s (S&P) views the agreement as aformidable step toward more underwriting stability”, which will lessen concerns about market disruption.

“The proposed updates are manageable and should not affect our ratings on insurers. Furthermore, we have recently maintained that ratings are unaffected by the short-term lapse of TRIA coverage,” said the rating agency.

Dave Matcham, chief executive of the International Underwriting Association (IUA), added: “The IUA is pleased to see the US House of Representatives has acted to renew the Terrorism Risk Insurance Act (TRIA) and therefore reduce economic uncertainty. In recent years there has been much progress in the insurance industry towards a better understanding of terrorism risks and there is certainly more private sector coverage on offer.

“But without a government backstop in the event of a large scale terrorist event, insurers would be forced to consider withdrawing cover in some areas and policies would potentially be much more expensive than they are currently. A renewal of TRIA will provide the insurance industry with the economic security it needs to continue supporting the wider economy across a range of business classes.”

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