With just weeks left for meaningful federal action on the future of the Terrorism Risk Insurance program, industry advocates are at a loss on what to expect from the lame duck Congress.
While US House Financial Services Committee Chair Jeb Hensarling is scheduled to meet this week with Senate Democrats about a possible extension of TRIA, the outcome is by no means certain. The long-term reauthorization of the bill hoped for by the industry could be replaced with a short-term reauthorization or possibly no action at all.
“If they can’t come to an agreement, we are open to doing a one-year extension making sure that it doesn’t have any problems,” House Majority Leader Kevin McCarthy told Politico. “But we would like to see a resolution of this with the negotiation between both sides.”
Industry representatives are just as baffled. Speaking from the Fall Meeting of the National Association of Insurance Commissioners, AAMGA Executive Director Bernd Heinze told
Insurance Business general opinion on the outcome of TRIA changes “hour to hour.”
“Even at NAIC hearings, industry representatives are saying it may be a full extension, it may be an extension for three to six months, it may lapse or it may be reauthorized retroactively,” Heinze said. “Everyone’s taking a wait-and-see attitude.”
The late delay in congressional action leaves even less time for insurance carriers and brokers to negotiate policies and policy renewals with clients, even as concern over terrorism-related threats in the Middle East and Eastern Europe grows.
Personally, Heinze is anticipating a short-term reauthorization of about six months—enough time for the new Republican-controlled Congress to formulate a more long-term strategy before the industry enters the first renewal cycle of 2015.
New leadership elections, which could see TRIA-friendly Sen. Richard Shelby become chair of the Senate Banking Committee, may also help soften some House desire to see the program gutted.
Regardless of the immediate outcome, Heinze is confident the industry has the capacity to continue writing affordable insurance policies without too much market disruption.
“This industry has some very smart, entrepreneurial people,” he said. “If we need to work around some exclusions, extend some endorsements, add manuscript endorsements or change premiums, we’ll do that.”
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