Friday, June 20, 2014

TRIA takes step forward to advance in the U.S. House of Representatives along with NARAB II

Today the House Financial Services Committee voted to advance H.R. 4871 the TRIA Reauthorization Reform Act of 2014 for consideration by the full membership of the U.S House of Representatives. NAPSLO previously reported on the proposed legislation here and here. NAPSLO is especially pleased and applauds Chairman Randy Neugebauer for successfully offering an amendment that will include the National Association of Registered Agents and Brokers (NARAB II) as part of this legislation.  NAPSLO strongly supports NARAB II.

The next step for the TRIA legislation is consideration and final vote in both chambers. NAPSLO is hopeful TRIA will be reauthorized in the coming months and that NARAB II will continue to be attached. NAPSLO will continue to provide updates as this legislation progresses. 

Wednesday, June 18, 2014

House Introduces TRIA Reauthorization, Schedules Markup of Legislation

 The National Association of Professional Surplus Lines Offices (NAPSLO) commends the continued progress from Congress on the reauthorization of the Terrorism Risk Insurance Act. Earlier this month, the Senate Banking Committee approved its reauthorization proposal. In recent days, the House Financial Service Committee released legislation which would extend the program for five additional years while making a series of reform to the program. NAPSLO appreciates the Committee's outreach and collaboration with industry as this process has progressed, and also appreciates the Subcommittee’s work on reforms contained in the NARAB II legislation.  NAPSLO continues to support the attachment of NARAB II to the final TRIA reauthorization legislation.

As the process moves forward, NAPSLO continues to urge swift action on the part of Congress to reauthorize TRIA before the program expires at the end of 2014.  A markup has been scheduled for Thursday, June 19 and NAPSLO looks forward to continuing to work with Congress to address this program’s reauthorization. 

Tuesday, June 17, 2014

The Council of Insurance Agents & Brokers (The Council) invites NAPSLO members to participate in free FATCA webinar

FATCA will become effective on July 1, 2014 and with it comes new compliance requirements for NAPSLO members. You can view recent updates from NAPSLO regarding FATCA here. The Council has developed a portal to assist brokers and insurers in confirming FATCA status of a non-U.S. entity.

On June 26th at 11:00 a.m. EDT, they will hold a free webinar to demonstrate the new portal and all NAPSLO members are invited to participate. NAPSLO encourages its members to participate in the webinar and learn how to use the portal. Access is free through December 31, 2014. For more information and to register, visit The Council here.

Friday, June 13, 2014

U.S. House of Representatives committee expected to file TRIA Reform Act soon

The House Financial Services Committee is expected to file the TRIA Reform Act of 2014 in the very near term. A copy of a “Discussion Draft” of the bill has started circulating with Members of the Committee and has been provided to industry stakeholders, although it has not been made public at this time. NAPSLO is currently reviewing the draft and its impact on the surplus lines insurance industry.

NAPSLO previously reported that the Senate Banking Committee approved a TRIA reauthorization bill that made few changes to the current TRIA program. The proposed House bill goes further and would make several substantive changes to the program. Some key substantive changes are in the following areas:

  • Extension: The TRIA program would be extended for a period of five years, through December 31, 2019.
  • Certification of TRIA Event:  The current program’s $5 million threshold for terrorism events has been eliminated, and the Treasury Secretary would be required to certify an event as an act of terrorism within 90 days of the event.
  • Bifurcation of NBCR and Non-NBCR Terrorism Events: The program coverage and triggers will be split and handled differently for Nuclear, Biological, Chemical and Radiological (NBCR) events and non-NBCR events. We believe this is a strong signal the House is evolving the TRIA program to one that may only cover NBCR events after December 31, 2019. NBCR is defined in accordance with the ISO form definition. While NAPSLO has encouraged the Committee to include cyber terrorism within a category of the program’s coverages and triggers that will apply to NBCR events, cyber terrorism would be considered a non-NBCR event in the proposed program.
  • Program Trigger: For NBCR events, the program trigger will remain $100 million in insured losses; however, for non-NBCR events, the triggers will increase from $100 million to $500 million in insured losses over the course of the five years ($200 million in 2016; $300 million in 2017; $400 million in 2018 and $500 million in 2019). There is also a minimum threshold of $50 million in insured losses  in order for any event to be considered and aggregated as multiple acts of terrorism to reach the program’s trigger.
  • Co-Payments: For NBCR events, the program’s federal co-payment will remain at 85% but the non-NBCR co-payment will reduce to 80% incrementally over the five year extension period (84% in 2016; 83% in 2017; 82% in 2018 and 80% in 2019).
  • Federal Recoupment: The Treasury’s mandatory recoupment rate will increase from 133% to 150% of government payments for losses under the aggregate retention amount. The industry’s aggregate retention will increase from $27.5 billion to the lesser of the sum of insurer deductibles and the aggregate amount of insured losses during the program year.
  • Small Insurer Opt-Out: Requires the Treasury Secretary to develop regulations that would allow small insurers to opt-out of the “mandatory offer” of the program.

The above is not an exhaustive list of the proposed changes in the bill, but highlights the House’s approach to the reauthorization of the TRIA program. It clearly demonstrates the Committee’s intent to reduce reliance upon the Government and increase reliance on the private insurance market to cover terrorism risks. NAPSLO will continue to review the bill and report on the progress as both chambers address the reauthorization of the TRIA program.   

Tuesday, June 03, 2014

U.S. Senate begins process to advance reauthorization of the Terrorism Risk Insurance Act (TRIA)

Today, the Senate Banking Committee voted 22-0 to advance S. 2244, a bipartisan bill supporting the reauthorization of TRIA. The legislation would (1) extend TRIA for a period of seven years; (2) phase in over five years an increase in insurers’ co-pay from 15 to 20%, with the government still covering 80% of each company’s additional losses; and (3) raise the mandatory recoupment threshold to $37.5 billion, so that when the insurance industry’s aggregate uncompensated losses are below $37.5 billion the government will be required to recoup its TRIA payments outlaid to insurers. The bill moves next to the Senate floor for debate and a vote by the full Senate is expected prior to August.

The House is expected to introduce a separate version of a bill to reauthorize TRIA in the very near term. That bill will go through a similar process as the Senate, where it first is approved by the House Financial Services Committee and then debated and adopted by the full House. The House will either pass its version, which will then need to be compromised with the Senate version, or simply take up the Senate bill. Either way, both the House and Senate will need to pass identical legislation for the proposal to become law. Most observers do not expect the final TRIA bill to be passed and sent to the President for signature until September at the earliest. NAPSLO will continue to provide updates as TRIA reauthorization progresses.