Targeting Action on Terrorism Insurance

National Journal
Jordain Carney
Nov. 19, 2013, 4:40 a.m.

{{ BIZOBJ (video: 4580) }}

Though Re­pub­lic­an Reps. Mi­chael Grimm and Randy Neuge­bauer don’t see eye to eye on how to move for­ward with the Ter­ror­ism Risk In­sur­ance Act, they do agree on at least one thing: They want le­gis­la­tion fin­ished in the first half of next year.

Speak­ing at a Na­tion­al Journ­al event Tues­day, Neuge­bauer, the chair­man of the Fin­an­cial Ser­vices sub­com­mit­tee over­see­ing the pro­gram, said that “in a per­fect world” the ter­ror­ism in­sur­ance le­gis­la­tion would be reau­thor­ized for two to five years to al­low private in­surers time to trans­ition.

The le­gis­la­tion, ori­gin­ally en­acted in 2002, was in­ten­ded to provide a trans­ition­al peri­od for private in­surers. Al­though some in­surers have ar­gued it is hard to de­term­ine how to price ter­ror­ism in­sur­ance, Neuge­bauer said that some mod­el­ing has taken place since 2002, with prices go­ing down as much as 70 per­cent.

Steven El­lis, the vice pres­id­ent for Tax­pay­ers for Com­mon Sense, said that even in 2002 there was “evid­ence at that time the mar­ket was start­ing to re­spond.” He didn’t back the pro­gram when it was ori­gin­ally in­tro­duced, but he said if the le­gis­la­tion is reau­thor­ized, “we should be in­creas­ing the private sec­tor’s skin in the game.”

Pro­fess­or Robert Rhee ad­ded that in­surers could mod­el for a ter­ror­ist event be­cause we “know where the as­sets are. We know where the risks are.” Though he said that the United States has a “heavy con­cen­tra­tion of losses,” re­fer­ring to ma­jor cit­ies, he noted that they make it dif­fi­cult, but not im­possible, to in­sure.

Mean­while, Neuge­bauer, R-Texas, said he would like to cut the fed­er­al gov­ern­ment’s in­volve­ment, ar­guing that it could be dis­tort­ing prices. “I think it is mar­ket-dis­tort­ing when the fed­er­al gov­ern­ment be­comes the back­stop “¦ most of the pri­cing is polit­ic­al.” 

But Leigh Ann Pu­sey, the pres­id­ent of the Amer­ic­an In­sur­ance As­so­ci­ation, said the pro­gram is less about private in­surers and more about the eco­nomy. “I think the eco­nomy still needs it,” she said, adding that she didn’t be­lieve the pro­gram was crowding out oth­er in­surers.

Both Neuge­bauer and Grimm want le­gis­la­tion out of the com­mit­tee in the first quarter of next year. Grimm, R-N.Y., said he was try­ing to get le­gis­la­tion passed by the end of 2013, but the House faces a lim­ited sched­ule. Neuge­bauer said le­gis­la­tion could be in­tro­duced in Feb­ru­ary and passed out of the com­mit­tee with­in a month or so. He is aim­ing to have le­gis­la­tion passed well in ad­vance of the Dec. 31 dead­line; the act has been reau­thor­ized twice be­fore, in 2005 and 2007.

But Grimm, un­like Neuge­bauer, wants to work at the start of the 114th Con­gress to make the pro­gram per­man­ent, with some slight changes. “TRIA has be­come like a baby to me, that needs to be nour­ished and taken care of,” he said. “It’s good policy. It works. It’s prudent fisc­al policy.”

He poin­ted to the rise of lone-wolf ter­ror­ists with­in the coun­try as a key reas­on. His com­ments echo those of FBI Dir­ect­or James Comey, who told the Sen­ate Home­land Se­cur­ity and Gov­ern­ment­al Af­fairs Com­mit­tee last week that while the risk of a 9/11-level of at­tack has de­creased, the coun­try faces a great­er risk from homegrown, lone-wolf at­tack­ers.

Grimm said he ex­pects the le­gis­la­tion to pass out of the com­mit­tee with a five-year re­new­al, and “changes the in­dustry can live with,” which may in­clude ad­just­ing premi­ums and in­creas­ing the trig­ger level, which is cur­rently set at $100 mil­lion.

Neuge­bauer also said a dis­tinc­tion could be made between con­ven­tion­al ter­ror­ist at­tacks and those that in­clude nuc­le­ar, bio­lo­gic­al, chem­ic­al, or ra­di­olo­gic­al weapons. He poin­ted to the “un­cer­tainty” over the po­ten­tial losses in such an event. “What are the long-term con­sequences of that?” he said.

Though Neuge­bauer said law­makers have been work­ing on the le­gis­la­tion for more than a year, he has yet to meet with the Sen­ate Bank­ing Com­mit­tee. He also ad­ded that he doesn’t know where Treas­ury Sec­ret­ary Jac­ob Lew stands, but would wel­come com­ments from the ad­min­is­tra­tion.

What We're Following See More »
Trump Won’t Debate Sanders After All
15 hours ago

Trump, in a statement: “Based on the fact that the Democratic nominating process is totally rigged and Crooked Hillary Clinton and Deborah Wasserman Schultz will not allow Bernie Sanders to win, and now that I am the presumptive Republican nominee, it seems inappropriate that I would debate the second place finisher. ... I will wait to debate the first place finisher in the Democratic Party, probably Crooked Hillary Clinton, or whoever it may be.”

UAW: Time to Unite Behind Hillary
1 days ago

"It's about time for unity," said UAW President Dennis Williams. "We're endorsing Hillary Clinton. She's gotten 3 million more votes than Bernie, a million more votes than Donald Trump. She's our nominee." He called Sanders "a great friend of the UAW" while saying Trump "does not support the economic security of UAW families." Some 28 percent of UAW members indicated their support for Trump in an internal survey.

Trump Clinches Enough Delegates for the Nomination
1 days ago

"Donald Trump on Thursday reached the number of delegates needed to clinch the Republican nomination for president, completing an unlikely rise that has upended the political landscape and sets the stage for a bitter fall campaign. Trump was put over the top in the Associated Press delegate count by a small number of the party's unbound delegates who told the AP they would support him at the convention."

Trump/Sanders Debate Before California Primary?
1 days ago
California: It’s Not Over Yet
1 days ago

"Clinton and Bernie Sanders "are now devoting additional money to television advertising. A day after Sanders announced a new ad buy of less than $2 million in the state, Clinton announced her own television campaign. Ads featuring actor Morgan Freeman as well as labor leader and civil rights activist Dolores Huerta will air beginning on Fridayin Fresno, Sacramento, and Los Angeles media markets. Some ads will also target Latino voters and Asian American voters. The total value of the buy is about six figures according to the Clinton campaign." Meanwhile, a new poll shows Sanders within the margin of error, trailing Clinton 44%-46%.