Rep. Frank warns Senate not to play TRIA ‘game’

Rep. Barney Frank (D-Mass.) is threatening to pass a 120-day extension of the current federal backstop to terrorism risk that expires at year’s end if the Senate insists on its narrower reauthorization of the program.

{mosads}Sensing that the Senate will force the House to accept its version or risk allowing the program to expire, the House Financial Services Committee chairman said he would resort to the stopgap measure so that the two chambers hold negotiations on a final bill.

“I’m not going to play that game. I will not be subjected to these tactics,” he said at the annual conference of the Property Casualty Insurers Association of America (PCI) on Monday.

Frank accused the Senate of exploiting a “strength of weakness” position or a “take it or leave it” approach by insisting the upper chamber would only accept less robust versions of House bills to renew the federal flood insurance program and the Terrorism Risk Insurance Act (TRIA).

By contrast, extending the current TRIA program for a few months would allow the House and Senate to hammer out their differences next year.

Frank’s remarks to PCI were first reported in The Insurance Journal, an industry trade publication.
The House passed a 15-year extension of TRIA in September. The version marked up by the Senate Banking Committee this month would extend the program for seven years.

The Senate version does not include House-passed provisions to add coverage of nuclear, biological, chemical and radiological (NBCR) attacks and include group life insurers in the program. It also keeps TRIA’s current trigger level of $100 million, while the House supported dropping it to $50 million.

Separately, a Senate version of legislation to renew the federal flood insurance initiative — which falls under Frank’s and Senate Banking panel Chairman Chris Dodd’s (D-Conn.) jurisdiction — did not expand the program to include coverage for wind, which the House had supported. However, that program does not expire until September of next year.

There is a sense among industry lobbyists that members of the Senate Banking Committee and their staffers view their version of the TRIA bill as inevitable. Dodd helped to foster that impression when he simply pared down the House version of the bill by offering a manager’s amendment rather than introducing a separate Senate bill to renew the program.

Dodd had previously favored extending TRIA by 15 years, but he agreed to a seven-year extension in order to win the support of Sen. Richard Shelby (R-Ala.), the panel’s ranking member. Shelby has opposed the federal program in the past.

Rep. Gary Ackerman (D), a member of the New York delegation who is working closely with Frank on the legislation, said it was critical to get the bill done by the end of the year: “What Barney was talking about is that we don’t want to get stuck with a Senate version. We’re going to want to have that discussion with our colleagues in the Senate.”

Ackerman said the final legislation must contain a reset mechanism for insurers, coverage for group life insurers and a reauthorization longer than seven years. “We have to make sure we get it closer to our numbers.”

He also insisted that the renewed program cover NBCR risk, arguing that the cause of a terrorist attack shouldn’t matter. “There’s very little difference between being murdered by a knife or being murdered by a gun. You’re still dead and you’re still murdered,” he said.

Insurers are pushing hard for a lengthy extension of the federal backstop, but remain divided on expanding the program to cover NBCR risk.

The American Insurance Association (AIA), which represents many large workers’ compensation insurers that are on the hook for nuclear risk due to state laws, have joined a coalition of large policyholders to push for the addition of nuclear coverage to the program.

Meanwhile, PCI and the National Association of Mutual Insurance Companies, along with large insurers Nationwide, AIG, State Farm and Allstate, are fighting the provision.

Lobbyists reacted cautiously to Frank’s remarks. “We’re glad these issues have the attention of Congress and we’re hopeful the House and Senate leaders can reach accommodation on their differences,” Blain Rethmeier, AIA’s senior vice president for public affairs, said.

Cliston Brown, PCI’s director of federal public affairs, said, “There are significant elements in both the House and Senate bills that we support, and we hope to see the Senate move ahead to passage expeditiously.”

Meanwhile, Brendan Reilly, senior vice president for governmental affairs at the Commercial Mortgage Securities Association, said he would prefer to extend the program by year’s end: “It is unclear how the markets would react, but we would urge caution given the potential dislocation. We remain hopeful that Congress can iron out their differences and pass a solution that is both comprehensive and sustainable in length.”

Senate Banking Committee spokesman Marvin Fast said, “The Banking Committee, by an overwhelming bipartisan vote, has approved legislation that will continue to make such insurance available to American businesses. Sen. Dodd is committed to advancing this legislation so that our nation’s workers and businesses will continue to have terrorism insurance.”