The property and casualty insurance industry lauded the SenateBanking Committee for reporting out a Terrorism Risk Insurance Actextension Tuesday, but "caution" remains a byword because it is notcertain when Congress will ultimately act, and whether finallegislation will provide the same federal support as currentlaw.

The bill sent to the full Senate yesterday is S. 2244, theTerrorism Risk Insurance Program Reauthorization Act of 2014. Thecurrent reauthorization expires Dec. 31.

Wendy A. Peters, senior vice president, Willis North America'sTerrorism Insurance Practice, says the 22-0 vote Senate-panelvote  provides "momentum" for eventual re-enactment, and"bodes well for passage prior to the fall."

Leigh Ann Pusey, president and CEO of the American InsuranceAssociation (AIA), says the panel's action "represents asignificant step forward toward reauthorization," and the unanimousvote "proves there is strong bipartisan support for theprogram." 

Nat Wienecke, senior vice president, federal governmentrelations at the Property Casualty Insurers Association of America(PCI), called it "a big step toward minimizing disruptions in theterrorism insurance market."

Jimi Grande, senior vice president of federal and politicalaffairs for the National Association of Mutual Insurance Companies,called on other legislative bodies to follow the Banking panel'saction. "With approval by the Senate Banking Committee, we'rehoping that the pace of progress for reauthorizing the TRIA programwill pick up considerably," he says. "Given the unqualified successof the TRIA program, and the widespread agreement on both sides ofthe aisle that it should be maintained, reauthorization has beenput off for far too long."

Charles Symington, senior vice president of external andgovernment affairs for the Independent Insurance Agents and Brokersof America, says, "It is critically important that agents andbrokers have the ability to provide protection to our customers inthe form of terrorism insurance, and the current TRIA program hasworked well to ensure the availability of this coverage."

Mike Becker, executive vice president & CEO of the NationalAssociation of Professional Insurance Agents, adds, "PIA stronglysupports a clean bill providing for a long-termreauthorization."

Concerns 

While industry representatives were supportive, that supportdoes not come without concerns. PCI's Wienecke, for example, saysPCI member companies "remain concerned with the language in thelegislation increasing each insurer's co-share by a third, from 15%to 20%."

Willis' Peters spoke to the impact of "the protracted delay andlack of clarity" as to what the reauthorization legislation willultimately look like. She says this uncertainty "isnegatively impacting the industry."

She also says the private-market insurance, with limitedavailability in highly concentrated risk areas, remainsinsufficient to fill the demands of the currentmarketplace. 

"More specifically, many workers' compensation insurers, whenfaced with potential credit rating downgrades in the absence of asolution, have been forced to offer significantly reduced lines orwithdraw from the market altogether," Peters said.

What will the House do?

Peters also says what course the House Financial ServicesCommittee will take remains a concern.

Peters says the panel has yet to release a formal draft of itslegislatives changes, though sources widely anticipate this will befar more limiting than that proposed by the Senate. "Whilethe consensus is that some variation of the current legislationwill be the basis of an extension going forward, certain keyelements of the proposals have raised concerns—particularly thosewhich have been suggested by the House Financial Services Committeestaff in their briefing memorandum," Peters says.

The Self-Insurance Institute of America (SIIA) also voicedconcern about the intentions of the House.

The SIIA says in a statement that, based on concerns about theHouse FSC draft and the panel's apparent intention to "reform theprogram," it has had private discussions with the committeestaff.

At the meeting, the SIIA officials say they "outlined concernsabout the future treatment of captives and urged the committee torefrain from restricting their access to TRIA coverage." Thestatement says SIIA and other industry groups "are continuingdiscussions with committee staff and members to help craft aneffective and politically workable reauthorization."