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P&C industry welcomes Senate Tria approval

The US Senate last week (17 July) passed legislation to extend the Terrorism Risk Insurance Act (Tria) by seven years, in a move that has been widely welcomed by the P&C insurance industry.

The US House of Representatives is now expected to vote on similar legislation next week.

The Senate bill, the Terrorism Risk Insurance Program Reauthorisation Act of 2014, or S.2244, was passed by a vote of 93 to four, demonstrating the overwhelming bipartisan support for the renewal of Tria.

The current Tria programme is due to expire at the end of 2014 and the (re)insurance industry has been lobbying hard to ensure the $100bn taxpayer-funded government backstop for terrorism losses is reauthorised.

The Senate legislation would also alter the structure of the current programme by increasing the amount insurers must contribute to claims above $27.5bn from 15 to 20 percent by 2019.

The bill also included new legislation establishing the National Association of Registered Agents and Brokers.

American Insurance Association (AIA) president and CEO Leigh Ann Pusey said the passage represents a "significant step forward" toward the programme's renewal.

"We commend the Senate Banking Committee for producing a bill that could garner such broad, strong bipartisan support, and urge the House to pass Tria reauthorisation legislation before the August recess," she said.

Pusey added that the AIA will continue to work with Congress to pass Tria reauthorisation legislation that "protects policyholders and taxpayers while ensuring the continued widespread availability of property casualty insurance for terrorism risks".

"We remain confident that Tria will be reauthorised in 2014 with strong bipartisan support," she continued.

Meanwhile, Aon applauded the US Senate for passing the legislation.

"We believe Tria has been an unqualified success in stabilising the insurance markets by allowing insurers to provide much-needed terrorism coverage to consumers at prices they are able to afford," the firm said in a statement.

Risk manager trade body Rims said it was encouraged by the passage of the Senate legislation, and called for the two legislative chambers to work together to ensure the programme is renewed.

"With the House and the Senate both in agreement that the need for a reauthorised Tria bill is a necessity, it's time for the two groups to come together and devise a final version," said Rims president Carolyn Snow.

As it stands, the House bill, titled the Tria Reform Act of 2014, would extend the period Tria is renewed for from three years to five years, as well as phasing in separate rules for nuclear, biological, chemical or radiological (NBCR) events.

For a single non-NBCR event, the bill would alter the programme trigger from the current $100mn to $500mn for aggregate losses by 2019. The structure of Tria would not be altered for NBCR events.

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