A snag may have developed in the efforts to extend the Terrorism Risk Insurance Act (TRIA) and reform of the National Flood Insurance Program (NFIP).

Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee that produced the House bills, said if the Senate avoids compromise and adopts a “take it or leave it” attitude on the bills, he will counter with legislation to extend the current programs for 120 days and deal with the bills’ differences next year.

Speaking before the Property Casualty Insurers Association of America (PCI), Frank expressed frustration with the Senate, which he said is claiming that its bills are the best it can do and if the House won’t just go along, then the programs will expire. “I’m not going to play that game,” Frank the PCI annual meeting. “I will not be subjected to these tactics.”

TRIA is scheduled to expire at the end of the year. Senate leaders have agreed on a bill to renew TRIA, although without some of the added provisions and for not as long as the House of Representatives wants. The Senate version would renew TRIA for seven years or until 2014, compared to 15 years in the House version. the Senate version does not contain other features that the House wants, including a provision mandating that insurers make available coverage for nuclear, biological, chemical and radiological (NBCR) attacks; inclusion of group life insurance;  or the lower retentions and deductibles the House supported. The Senate wants the government program to trigger after $100 million in losses, whereas the House sets the trigger at $50 million.

House and Senate flood bills also differ. The Senate bill does not increase maximum coverage limits and omits optional coverages, including business interruption coverage and additional living expenses. The Senate bill does not include optional federal wind coverage, which the House includes and Rep. Frank says he supports.

What It Means to Agents:  If differences on TRIA cannot be worked out, we may be back to operating on a temporary renewal until those differences are resolved. Rep. Frank’s threat to back a 120-day renewal is an effort to extract more of what he wants from the Senate. The same brinksmanship applies to the flood bill, except that the NFIP authorization doesn’t expire until the end of 2008.

120-Day Extensions for Federal Flood, TRIA Possible (Insurance Journal 10/29/07)
 
Senate Banking Committee Advances Seven-Year TRIA Renewal (10/23/07)
 
Senate Banking Committee Advances NFIP Reform Bill Minus Wind Provision (10/23/07)

October 30, 2007