House Committee Advances Terrorism Risk Insurance Bill

On Friday, June 20, the House Financial Services Committee, chaired by Jeb Hensarling (R-Texas), voted to approve a five-year reauthorization of the Terrorism Risk Insurance Act (TRIA) program due to expire at the end of this year.

Renewal of the TRIA program is a top priority for NAIOP and the commercial real estate industry.  The program, which creates a federal backstop against losses due to terrorist acts beyond a certain amount, enables private insurers to continue offering coverage for acts of terrorism. Without it, the availability of terrorism coverage for commercial projects would be greatly diminished as insurers refuse to cover acts of terrorism in new policies, and exclude losses from terrorist upon renewal of existing policies.

Sponsored by Rep. Randy Neugebauer (R-Texas), the House bill, the TRIA Reform Act of 2014 (H.R. 4871), was approved on a party-line vote of 32-27. The partisan vote in the House contrasts sharply with a vote earlier this month in the Senate Banking Committee on that body’s version of a TRIA extension bill, (S. 2244) which passed the committee by an overwhelming 22-0 bipartisan vote. The Senate version contains fewer changes to the underlying TRIA program while renewing it for s years. The full Senate is expected to vote on S. 2244 in July.

Both bills call for insurers to pay a larger proportion of losses from any future terrorist actions, among other things. The House bill, however, also adds a distinction between conventional terrorist attacks and nuclear or biological acts of terror, which raises concerns for industry as it creates future uncertainty as to coverage.

NAIOP is a member of the Coalition to Insure Against Terrorism (CIAT), which advocates for renewal of the program and issued a statement in support of the House committee’s action.  NAIOP’s government affairs staff continues to meet with House and Senate members and their staff to push for quick passage of TRIA renewal in each chamber.

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