PCI Backs Senate Bills on TRIA and Flood Insurance

Legislation on terrorism and flood insurance scheduled for discussion in the Senate Banking Committee today represents good steps forward on issues of national importance, according to the Property Casualty Insurers Association of America (PCI). 
 
The Senate version of Terrorism Risk Insurance Act (TRIA) legislation would extend the program for seven years, eliminate the distinction between foreign and domestic terrorist attacks, and more clearly define the cap for losses paid by private insurers. Most importantly, the bill does not include a mandate for insurers to make available coverage for attacks using nuclear, biological, chemical, and radiological (NBCR) weapons of mass destruction.  
 
The Senate bill differs significantly from the recently passed House TRIA legislation (H.R. 2761), which included a requirement that insurers make available NBCR coverage to all commercial consumers, extended the program for 15 years and reduced the trigger—the level of damages at which the program would kick in—to $50 million. 
 
PCI has steadfastly opposed mandatory coverage for risks from weapons of mass destruction, and while it supports a longer term and a lower event trigger because such provisions would add greater stability to the marketplace and allow more small and mid-sized companies to participate without risking financial insolvency, the Senate proposal, as a whole, is encouraging. 
 
“We are pleased with the language in the Senate TRIA bill,” said Ben McKay, PCI’s senior vice president, federal government relations. “We have strongly opposed inclusion of mandatory make-available provisions for NBCR attacks because such a requirement is the most significant threat to a healthy TRIA program. This kind of mandate would reduce the number of consumers who purchase any type of terrorism insurance, creating negative consequences for the business community and the nation’s economy. Additionally, a seven-year extension will allow time for a fair analysis of the potential for private sector growth in this market. Also, while we still would like to see a lower trigger to help encourage more market competition, it is significant that the bill did not increase the existing trigger level. On the whole, this bill is very positive and sends a strong signal to the building markets that terrorism insurance coverage will be available into the future and to the terrorists that they cannot determine where we will build and work.” 
 
The flood bill would renew and strengthen the National Flood Insurance Program (NFIP) without adding wind coverage, a financially burdensome proposal included in the legislation that passed the House (H.R. 3121). 
 
“This is a very good bill. PCI has always supported reforming the flood program so that it can be solvent for the foreseeable future and helpful to consumers in need, but the addition of wind coverage would be extremely costly and potentially very damaging to the NFIP and its policyholders,” McKay said. “We fully support the proposal to move forward with needed reforms without including needless additional exposure to a program that is already overburdened in the wake of Hurricanes Katrina and Rita.” 
 
About PCI 
 
PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $194 billion in annual premium, 40.1 percent of the nation’s property/casualty insurance. Member companies write 51.3 percent of the U.S. automobile insurance market, 39 percent of the homeowners market, 32.1 percent of the commercial property and liability market, and 38.7 percent of the private workers compensation market.