Sunday, June 29, 2014

HR 4871 Introduced – TRIA Reauthorization

As I reported earlier Rep. Neugebauer (R,TX) introduced HR 4871, the TRIA Reform Act of 2014. This is one of five (HR 508, HR 1945, HR 2146, and S 2244) bills under consideration that would extend the Terrorism Risk Insurance Act that is due to expire this year. This bill would extend the operation of that Act through 2019 while making a number of changes to the program.

One major change would be to annually increase the trigger amount that would cause the US Treasury to pay a portion of the claims for a designated terrorist attack, from the current $100 million to $500 million in 2019.

The bill would also establish a new category of terrorist attacks. Section 102 of the TRIA authorizing language (15 USC 6701 Note) would be amended to require the Secretary of the Treasury to determine whether or not a designated terrorist attack would be an ‘act of NBCR [Nuclear, Biological, Chemical or Radiological] terrorism’ {§102(1)(D)}.

The term ‘NBCR terrorism’ is explained in the added §102(9) as any covered act of terrorism covered under the TRIA that “to the extent that the insured losses involve, regardless of any other cause or event that contributes concurrently or in any sequence to such insurance loss” due to:

• The dispersal or application of radioactive material, pathogenic or poisonous biological or chemical material;
• The use of a nuclear weapon or device that involves or produces a nuclear reaction, nuclear radiation, or radioactive contamination” or
• The release of radioactive material, pathogenic or poisonous biological or chemical material where “it appears that one purpose of the act of terrorism was to release such material”.

The only consequence of the declaration of an act of NBCR terrorism would be to lower the amount that triggers US participation in the payment of claims to $100 million.

As I noted in the earlier blog I think that this bill has the best chances of moving forward in the House since Neugebauer is the Chair of the Housing and Insurance Subcommittee of the House Financial Services Committee.

The Senate bill may be considered first and then the House leadership would have to decide whether or not they would consider their own bill or tack one of the House bills (presumably this one) onto the Senate bill as substitute language. In either case I would not be surprised to see the NBCR terrorism portion of this bill in any bill that goes to the President.

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