Efforts on the
Hill to extend the Terrorism Risk Insurance Act (TRIA) heated up on July 17 with
the Senate voting 94-3 to extend the program through 2021 (S. 2244). However, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, delayed
a scheduled vote on the bill he supports in the House (H.R. 4871) due to a standoff being led by Representative
Pete King, R-N.Y.
The Hensarling-led House measure would narrow the scope of TRIA in two key areas, increasing the trigger and bifurcation of threats. King seeks to amend these provisions similar to the Senate treatment in S. 2244 - leaving the House without the votes necessary to pass the bill. As a result, Hensarling said in a strongly worded statement that the process is now “going to take several more months before there is a resolution.”
TRIA is set to expire at the end of this year and without an extension, insurance carriers have said they are unwilling to provide coverage, which is problematic because most lenders require terrorism insurance. If the program is allowed to expire, multifamily owners will most likely face significant cost increases and economic development will slow triggering severe economic instability.
current House bill extends the program for five years and makes reforms to
reduce the federal footprint and taxpayer exposure, including increasing the
point at which the federal backstop is triggered from $100 to $500 million for
conventional events such as 9-11. Trigger levels remain at $100 million for
events caused by Nuclear, Biological, Chemical or Radiological weapons.
In contrast, the Senate passed bill would extend the program for seven years. The bill has the support of the White House and maintains much of the program’s current form, including the level at which the federal backstop is triggered. It does, however, make minor changes to the risk sharing elements of the program and increases the federal recoupment amounts.
NMHC/NAA continue to advocate for final passage to ensure economic disruption is avoided and coverage is available and affordable for apartment owners.
Before this week’s standoff, House and Senate leaders were anticipating floor action in both chambers before the August recess and a final reconciliation of the bills in conference before the end of the year. But now it appears that negotiations are stalled until after the August recess at minimum, or can be pushed off until the lame duck session after the November mid-term elections.