House Okays Senate Terror Backstop Bill

Below, please find news coverage of today’s passage of H.R. 2761, The Terrorism Risk Insurance Program Reauthorization Act of 2007 by the United States House of Representatives.

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House Okays Senate Terror Backstop Bill
BY ARTHUR D. POSTAL
NU Online News Service, Dec. 18, 4:25 p.m. EST

WASHINGTON —The House, despite angry objections from some members, voted today to approve the Senate version of legislation extending the federal backstop on terrorism insurance for seven years.

Passage came on a 360-53 vote. On the losing side were 50 Republicans and three Democrats.

As passed by the House, H.R. 2761—The Terrorism Risk Insurance Program Reauthorization Act of 2007—effectively extends the current program through 2014 and adds coverage of domestic terrorist events.

Several House Democrats before the measure passed took the occasion to sharply criticize the Senate measure and Sen. Richard Shelby, R-Ala., ranking minority member of the Senate Banking Committee.

Mr. Shelby had insisted the Senate version would have to carry the day over a more expansive House version of the legislation that would have added more coverage and extended the program for 15 years.

Both Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and Rep. Gary Ackerman, D-N.Y., railed against the lack of communication the House had with the Senate.

And Rep. Ackerman said during the debate he was introducing a bill today that would add a provision to the Senate bill.

His language would increase terrorism risk insurance capacity for properties in urban areas seen as prime terrorism targets where there is currently a shortage of such capacity available, even with the current program in place—the so-called “reset” provision.

Mr. Ackerman, acknowledging that the House version could not pass the Senate, commented, “Santa Claus is not going to give America terrorism risk insurance for Christmas, and we don’t live with the Easter Bunny in the Senate’s candy-land, where catastrophic risk can be comfortably ignored.”

Rep. Ackerman added, “Saying ‘the market will provide’ doesn’t make it true.”

Rep. Frank stated , “I do regret the breakdown in the U.S. Sena te of the legislative process.” He explained that when attempts were made to contact Sen. Shelby , the senior Repu blican on the committee, “the gentleman fro m Alabama simply refused to meet with us.”

“If the Senate had voted against the reset mechanism, I would’ve been disappointed, but I would have said, ‘well that’s the way it works.’” He asked members of the Senate not to put themselves in a position “where there is a one-person veto.”

Rising in support of the legislation, Rep. Spencer Bachus, R-Ala., ranking minority member of the House Financial Service Committee, called it a good compromise.

“While it is not a perfect bill, the Senate’s TRIA extension is a reasonable, bipartisan compromise that will ensure the continued vitality of our commercial insurance markets operating under the threat of global terrorism,” he said.

He called the seven-year extension “fiscally responsible,” but said he supported it because it “otherwise limits and improves taxpayer protections and prevents further intrusion by the government into this market-based program.”

The only other change to the current legislation adds a provision that would mandate that the Government Accountability Office conduct two studies and make recommendations to Congress.

One study would examine the issue of risk posed by attacks from nuclear, biological, chemical and radiation (NBCR) attacks, and the other study would examine insurance scarcity and capacity restraints in certain regions of the country, such as lower Manhattan.

And, in order to comply with budget requirements, the extension mandates that all commercial policyholders would have to pay higher annual surcharges than under current law for a medium-sized terrorism event.

The money is recouped through a 3 percent annual surcharge on policyholders up to $27.5 billion. After that, the Treasury Secretary has an option to require repayment.

For a terrorist attack that occurs between January 2008 and December 2011 and requires recoupment based on the current formula, that recoupment must be paid by the end of the 2012 fiscal year.

So, for example, for an event in January of 2008 that requires recoupment, the required amount of money must be paid by the end of the 2012 fiscal year.

For an event in December of 2011 that requires recoupment, the required money must also be paid by the end of the 2012 fiscal year. So, the worst-case scenario is that there would be only a 9-month period in which to pay the recoupment.

For an event after December 2011 (i.e., anything from January 2012 on) that requires recoupment, the money must be paid by the end of the 2017 fiscal year.

Today’s vote for passage came under expedited rules requiring support by two-thirds of House members voting.

The bill now goes to President Bush, who is expected to sign it.

As passed by the House under the expedited procedures, the bill also leaves out two other provisions originally in House legislation. One provision would have cut the current insured loss trigger for federal involvement in paying claims from an attack from $100 million to $50 million.

As in December 2005, the program won a December approval in time to be a Christmas present to its insurance industry supporters. The current program is set to expire Dec. 31. Today’s action came as Congress is considering must-do legislation with plans to leave town as soon as possible this week.

Sen. Chris Dodd, D-Conn., who co-authored the original Terrorism Risk Insurance Act after 9/11, reacted to the House vote by saying, “I commend the House for their approval of this measure. It will help to protect our nation’s workers and businesses from the risk of terrorism and help to ensure that our economy is able to thrive and create jobs.”

The measure, he said, “is a carefully crafted, strong and balanced bill that the president has said he will sign into law.”