House Committee Approves TRIA Bill
On Friday, June 20th, the House Financial Services Committee approved Rep. Randy Neugebauer’s (R-TX) TRIA Reauthorization bill, H.R. 4871, by a vote of 32 to 27. The vote fell along party lines. This followed an extensive markup hearing on Thursday, June 19th, during which Rep. Neugebauer stated that his goal with H.R. 4871 was to shrink the taxpayer footprint, bring surety to the market, and increase the amount of risk that private insurers are able to take on. His bill reauthorizes the program for 5 years, gradually increases the trigger amount from $100 million to $500 million, decreases the federal government co-share from 85% to 80%, and bifurcates the treatment of “conventional” terrorism attacks from Nuclear, Biological, Chemical or Radiological (NBCR) attacks. Notably, several Republicans on the Committee expressed concerns with some of the bill’s provisions, but pledged to support it regardless to move the process along; it is possible that changes will be made on the House floor regarding their concerns.
The next step is for the bill to be brought to the House floor and voted on there, which could occur as early as next week; the Senate bill (which passed the Senate Banking Committee unanimously on June 3rd) still has to be brought to the Senate floor and voted on as well.
Terrorism risk insurance is an important factor in construction and commercial financing, and a critical security measure in CMBS transactions. Without the federal program created by TRIA, private insurance companies would not have the capacity to provide the amount of coverage needed by the market, and terrorism insurance would be difficult to find and in many cases prohibitively expensive. TRIA keeps terrorism insurance coverage available and affordable, and NAR has advocated for its swift reauthorization. NAR participates in the Coalition to Insurance Against Terrorism, who sent a letter to the House Financial Services Committee expressing concerns with H.R. 4871, but nonetheless encouraging members to approve it so the reauthorization process could continue to move along.