The U.S. House of Representatives and Senate have approved a compromise Terrorism Risk Insurance Act (TRIA) bill which will extend the federal terrorism insurance backstop through 2007. The bill has been sent to the President for signature.
TRIA requires insurers to provide coverage for property & casualty risks and, in return, guarantees that the U.S. government will pay most of the losses after an initial deductible. The approved bill increases the amount of losses that trigger federal payments from the current threshold of $5 million to $50 million in 2006 and $100 million 2007.
In addition, the retention level, or the maximum amount the industry would pay in a year, increases from $15 billion to $25 billion in 2006 and $27.5 billion in 2007.
The compromise features language from the White House suggested legislation, which was supported by the Senate. Unfortunately, features of the House bill, including surplus lines language supporting Automatic Export for exempt commercial purchasers and One-State Compliance with diligent search requirements for multi-state surplus lines risks, were not included in the final bill.
The Terrorism Risk Insurance Act was scheduled to expire at the end of the year and both the House and Senate had passed extensions but had to work out differences in the respective bills.