On Wednesday, the U.S. House of Representatives overwhelmingly passed a measure to extend for six years a federal terrorism reinsurance program that is set to expire Dec. 31, but the bill is likely to face considerable opposition in the U.S. Senate due to its inclusion of language to modify a noninsurance provision of the Dodd-Frank Act.
The House approved 417-7 an amended version of the Senate’s Terrorism Risk Insurance Program Reauthorization Act of 2014 that was unveiled Tuesday after extensive negotiations between House Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Sen. Charles Schumer, D-N.Y. The only “nay” votes were cast by Republicans.
The American Insurance Association praised the House’s passage of the TRIA reauthorization and urged the Senate to pass the bill.
Wednesday’s sweeping vote in favor of the measure came despite House Democrats’ recent warnings against the bill’s inclusion of an unrelated proposal to tweak Dodd-Frank to allow end users, such as energy and agricultural companies, to avoid having to post margin on transactions conducted with regulated entities like swaps dealers and financial institutions if they use derivatives only to hedge “legitimate business risk” and not for speculation.
The end-user proposal passed the House by a large bipartisan majority, but Reps. Carolyn Maloney, D-N.Y., and Maxine Waters, D-Calif., said during a Tuesday hearing of the House Rules Committee that the Dodd-Frank language — which they said was not contemplated during negotiations — will be met with opposition in the Senate, making it difficult to pass a TRIA reauthorization bill before the program expires.
A representative for Schumer did not immediately respond to a request for comment late Wednesday. In a policy statement released Wednesday, the White House said that it supports the reauthorization of TRIA but “strongly opposes” the Dodd-Frank modifications.
The bill would extend the terrorism reinsurance program, which was established through the Terrorism Risk Insurance Act after the 9/11 attacks, for six years and would incrementally raise the trigger for reinsurance coverage from $100 million to $200 million beginning in 2016. The bill also provides for the creation of the National Association of Registered Agents and Brokers, a body made up of state insurance commissioners and insurance market representatives, to streamline the licensing of registered insurance agents and brokers.
The Senate’s TRIA reauthorization bill, which passed 93-4 in July, called for the program to be extended for seven years and made modest changes to the level of government support provided.
Meanwhile, the House version supported by Hensarling provided for the TRIA program to be extended for five years and included substantial changes. The bill, which passed out of committee in June but never made it to the House floor, envisioned bifurcating federal reinsurance coverage for conventional terrorist attacks and for nuclear, biological, chemical and radiological attacks and raising the trigger for coverage for conventional terrorism attacks from $100 million to $500 million in losses. The bifurcation language was not included in the amended bill.