Tuesday, February 12, 2013

Terrorism Risk Insurance Extension

I noted almost a week ago that Rep. Grimm (R,NY) introduced HR 508, the Terrorism Risk Insurance Act of 2002 Reauthorization Act of 2013 (further shortened to TRIA Reauthorization Act of 2013). It has taken a week for the GPO to post this proposed legislation on-line and I can’t figure out what took so long.

What the Bill Says

This is a very short bill. Section 1 provides the short titles and §2 modified three dates in the Terrorism Risk Insurance Act (15 USC 6701 note):

• In the definition of ‘Program Year’ {§102(11)(G)} it changes the last program year from 2014 to 2019;
• In the discussion of insured loss shared compensation and the recoupment of the Federal share for an attack that occurs after January 1st, 2012 {§103(e)(7)(E)(i)(III)} extends the date for the government to collect premiums from September 30th, 2017 to September 30th, 2024; and
• Changes the termination date of the program {§108(a)} from December 31st, 2014 to December 31st, 2019.

No other changes are made in the TRIA.

An Oddity

While this is a very simple bill it seems that Grimm’s staff (or perhaps the staff of the Financial Services Committee, upon which Grimm serves) has made a very simple yet costly mistake in their crafting of the second change described above.

In 2007 when Congress last reauthorized the TRIA (PL 110-160) they added the provision providing a time line for the Secretary of the Treasury to recoup any federal payouts to support insurance payments to be made to victims of terrorist attacks under §103(e)(7)(C). That schedule provided that:

• For attacks made before 12-31-10, the mandatory collections were required to be made by 9-30-12 {§103(e)(7)(E)(i)(I)};
• For attacks between 1-1-11 and 12-31-11, the collections were to be completed by 9-30-17 with 35% being recouped by 9-30-12 {§103(e)(7)(E)(i)(II)}; and
• For attacks after 1-1-12 until the program termination date on 12-31-14, the collections were to be completed by 9-30-17 {§103(e)(7)(E)(i)(III)}.

It was this last date that would be changed by this bill, effective extending the re-payment period by seven years until 2024. In keeping with the intent of recouping the government’s costs in a timely manner as envisioned by the 2007 re-authorization the extension to 2024 should have been made in stages; for example:

• Attacks in 2015 and 2016 would have funds recouped by 2018;
• Attacks in 2017 and 2018 would have funds recouped by 2020; and
• Attacks in 2019 would have funds recouped by 2022.

Of course that is asking for consistency in legislation and that is a bit far-fetched for Congress. Oh well, I suppose that I should just be happy that they are considering the extension of the current program almost two full years before it expires.

Now we’ll just have to wait to see how long it takes for this bill to be considered.

No comments:

/* Use this with templates/template-twocol.html */