United States: Senators Make Opening Bid, Introduce TRIA Bill

With the Terrorism Risk Insurance Act (TRIA - P.L. 107-297) set to expire at the end of 2014 unless extended, today, Senators Jack Reed (D-RI), Charles Schumer (D-NY), Christopher Murphy (D-CT), Mark Kirk (R-IL), Dean Heller (R-NV) and Mike Johanns (R-NE) introduced a bill to extend TRIA.

The senators' TRIA 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. The senators' bill and all three House bills are essentially bills to extend the TRIA program and extend the deadline for the mandatory recoupment required under TRIA. The bills leave most of the current terms of TRIA as last amended in 2007 (P.L.110-160) intact.

It is our understanding that the text of the senators' TRIA bill as introduced today is the same as the text of the attached document which is titled a discussion draft. 

TRIA legislation in this Congress

The TRIA program was amended and extended for two years in 2005 (P.L. 109-144) and then again amended and extended in 2007 (P.L. 110-160) Unless further extended, TRIA will expire at the end of 2014. Set forth below are brief summaries of the TRIA discussion draft and the three House bills:

The senators' TRIA extension bill

  • Reauthorizes the TRIA program for seven years until the end of the year 2021;
  • Extends the deadline for mandatory recoupment by 7 years until September 30, 2024;
  • Phases in two significant reforms to the current TRIA program over a five year period;
  • Increases insurers' co-share of insured terrorism losses from an 85 percent-15 percent level to an 80 percent-20 percent split with the federal government
  • Increases to $37.5 billion from the current level of $27.5 billion the amount of losses that the insurance industry as a whole incurs for which a mandatory recoupment of the federal share of the loss will be imposed.

The three House bills

H.R. 508, The Terrorism Risk Insurance Reauthorization Act of 2002 Reauthorization Act of 2013

  • Introduced by Congressman Michael Grimm (R-NY) on February 5, 2013
  • 87 cosponsors
  • Referred to the Financial Services Committee
  • Would reauthorize the existing TRIA program for five years until the end of 2019 and would extend the statutory deadline for mandatory recoupment until September 30, 2024, seven years beyond the current deadline for recoupment

H.R. 1945, The Fostering Resilience to Terrorism Act of 2013

  • Introduced by Homeland Security Committee Ranking Member Congressman Bennie Thompson (D-MS) on May 9, 2013
  • 7 cosponsors
  • Referred to both the Financial Services Committee and the Homeland Security Committee
  • H.R. 1945 would extend the current TRIA program for ten years until the end of 2024 and would extend the statutory deadline for mandatory recoupment until September 30, 2024, seven years beyond the current deadline
  • Under current law, whether an incident is considered an "act of terror" depends on a certification by the Treasury Secretary in conjunction with the Attorney General and the Secretary of State
  • This bill would add the Secretary of Homeland Security as the lead authority for certifying that an event was an "act of terror" and require the Homeland Security Secretary to provide information and reports on terrorism risks and best practices to foster resilience in the face of terrorism
  • The Treasury Secretary would remain part of the certification process as a concurring party, not the lead authority

H.R. 2146, Terrorism Risk Insurance Program Reauthorization Act

  • Introduced by Financial Services Committee Housing and Insurance Subcommittee Ranking Member Michael Capuano (D-MA) on May 23, 2013
  • 48 cosponsors
  • Referred to the Financial Services Committee
  • Would reauthorize the existing TRIA program for ten years until the end of 2024 and extend the mandatory recoupment deadline for ten years from the current deadline to September 30, 2027
  • Would also require the President's Working Group on Financial Markets to file reports on market conditions in 2017, 2020 and 2023

History behind original TRIA legislation

Faced with enormous losses resulting from the September 11, 2001 terrorist attacks on the United States and because they felt unable to adequately price terrorist risk, most reinsurers withdrew from or severely limited the market for terrorism insurance.

As a result, terrorism risk insurance became unavailable or extremely expensive and many businesses could no longer find or afford such coverage. The lack of such coverage had an immediate and tremendously adverse effect on many sectors of the economy, particularly those that require substantial, long-term investments such as the real estate, construction, utilities, energy and transportation sectors. Businesses were reluctant to undertake long-term, sizable investments without the assurance that they could protect themselves through insurance against the risk of terrorism.

Arguments for and against TRIA's reauthorization

TRIA was first enacted by the Congress in November 2002 (P.L.107-297) as a three-year program to provide a government reinsurance backstop in the event of a terrorist attack given the inability or unwillingness of private reinsurers to do so. When TRIA was first enacted, it was characterized as a "temporary" intervention by the Federal government to provide reinsurance while private reinsurers restored their capacity and their willingness to provide such reinsurance coverage.

Many Republicans take the position that private reinsurers have restored much of their willingness and capacity to offer terrorism reinsurance and that the continued existence of the TRIA program itself stands in the way of the ability of the private reinsurance market to flourish. They argue that, while many Democrats said that TRIA should be a "temporary" program, Democrats by and large are viewing TRIA as if it should be permanent.

In contrast, most Democrats and some Republicans say that while reinsurers and insurers have improved their ability to estimate the potential range of damages from a terrorist attack, they have no real ability to assess or determine the likelihood of such an attack. TRIA's supporters argue that, while the private reinsurance market is improving slowly, terrorism risk still cannot adequately be priced by the private sector, and private reinsurers continue to lack the capacity to provide enough coverage to ensure that terrorism risk insurance is available on reasonably affordable terms to all businesses that seek it. Thus, they argue that, while the private reinsurance market continues to improve, another "temporary" reauthorization of TRIA is essential to maintaining business confidence and avoiding a severe downturn in the economy.

The current congressional landscape re: TRIA reauthorization

Skepticism by House Republicans

There have been several Congressional hearings in the past year on TRIA reauthorization including Senate Banking Committee hearings on February 25, 2014 and September 25, 2013, a full Financial Services Committee hearing on September 19, 2013 and a Financial Services Committee Housing and Insurance Subcommittee hearing on November 13, 2013.

Financial Services Committee Chairman Jeb Hensarling (R-TX) has expressed great skepticism about the wisdom of extending the TRIA program and some Congressional Republicans appear to oppose any extension of the TRIA program. In his opening statement at the September 19, 2013 hearing, Hensarling stated: "Although I was not personally here in 2002, I know that the original purpose of the TRIA bill when it came out of committee was to 'create a temporary industry risk spreading program for foreign acts of terrorism' and 'facilitate a transition to a viable market for private terrorism risk insurance.'

"At the time it was a thought that originally the TRIA act would give the insurance industry time to re-capitalize and develop new models that they could price for terrorism risks and increase industry capacity. Three years later in 2005 Congress decided to make TRIA a little less temporary and extended it for two years. In 2007, Congress was back again to stretch the boundaries of modern linguistics by extending TRIA temporarily for seven additional years and expanding it to cover any acts of terrorism, foreign or domestic. So we all must recognize that in just five years TRIA has leapt in scope and quadrupled in length, neither of which I think could be mistaken for facilitating a transition to a viable market for private terrorism risk insurance.

"I think this begs a number of questions that I hope will be addressed ... What does constitute a temporary program? And I'm not sure how many of us actually have faith in an ex-ante recovery scheme of funds, so it begs the question -- if premiums are not gathered, is this truly an insurance program? Is it temporary?"

Request for GAO report

Similarly, in a March 13, 2014 letter to the Government Accountability Office, Housing Subcommittee Ranking Member Randy Neugebauer (R-TX) and Congressman Ed Royce (R-CA) asked the GAO for an oral status report by April 15 and a completed written report by May 15 on the costs and benefits of the TRIA and the potential impact of not reauthorizing the law. Noting that the price of terrorism insurance had declined 70 percent since the September 11th attacks and that the availability of terrorism insurance has increased, Neugebauer and Royce argue that "As availability of terrorism insurance coverage has improved, so too has reinsurance capacity and the ability of insurers to price the risks." Neugebauer-Royce Letter

Thus, given the skepticism of many Congressional Republicans about, and in some cases their hostility to, an extension of the TRIA program, it seems clear that the primary impetus for any TRIA reauthorization is likely to come from the Senate where Senate Democrats on the Banking Committee by and large are very supportive of the TRIA program and where some Senate Republicans, such as Senator Mark Kirk of Illinois and Dean Heller of Nevada are also supportive. December 16, 2013 Kirk-Heller letter supporting a TRIA reauthorization. Accordingly, today's introduction of the senators' TRIA extension bill is an important development.

When the senators introduced their bill, they noted their interest in proceeding promptly with a reauthorization of the TRIA program. There are some indications that they may be seeking a Banking Committee markup of their TRIA bill shortly after the Committee's scheduled April 29th markup of the Johnson/Crapo GSE reform bill concludes. We will continue to provide TRIA reauthorization updates as developments warrant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
17 Oct 2018, Seminar, Washington, DC, United States

Earn up to six hours of credits towards Virginia's October 31 MCLE compliance deadline (credit approval is pending) at this full-day program.

25 Oct 2018, Other, New York, United States

Once again, Dentons is proud to bring together insurance industry leaders, lawyers and regulators for a full-day examination of the most current issues.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions