Yesterday, Democratic and Republican Senators jointly submitted draft legislation that proposes a seven-year extension to the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIPRA”). This seven-year extension proposes minor changes to the current legislation:
- Changing the current coinsurance requirement on “certified” terrorism losses from 15% to 20%
- Raising the post-event recoupment by the U.S. Government from $27.5 million to $37.5 million.
The Senate Bill is a positive step forward as it indicates bi-partisan support. It is encouraging to see the Senate focus on this important issue.
However, it does not preclude the possibility of further delays by the House of Representatives, who have been more vocal in their opposition to TRIPRA. The proposed Senate bill joins three separate bills already introduced in the House of Representatives in the current Congress to extend the TRIA program (H.R. 508, H.R. 1945 and H.R. 2146) for varying durations on modestly different terms.
Impact on the Market
We would not expect the Senate bill to have a significant impact on the market, as the disruption caused by the ongoing uncertainty to TRIPRA’s renewal persists, and carriers have already begun responding with the imposition of sunset clauses or other policy limitations as of renewal.
Policyholders are well advised to be proactive in evaluating current terrorism purchasing requirements and making certain that the insurance purchased will address minimum requirements for loan agreements and statutory requirements and to be mindful of possible legislative changes.