Congress has approved the extension of the Terrorism Risk Insurance Act (“TRIA”) through 2020, and the President is expected to sign the bill into law in the near future. The captive insurance industry had been left in a state of limbo when the 113th Congress adjourned without passing the reauthorization legislation that would have extended TRIA. This failure to act caught many industry insiders by surprise due to the overwhelming bipartisan support to renew the program. House and Senate negotiators had reached agreement in December, but their efforts were block by Senator Tom Coburn who has since retired.
Fortunately, Congress acted uncharacteristically swiftly and passed the “Terrorism Risk Insurance Program Reauthorization Act of 2015.” This new legislation contains the same terms as the compromise bill to which the House and Senate negotiators previously agreed. The key changes to the program are as follows: (i) the program trigger will increase $20 million a year starting in 2016 from $100 million to $200 million; (ii) the NBCR trigger, however, will remain at $100 million; and (iii) the mandatory recoupment threshold from will increase from $27.5 billion to $37.5 billion – phased in by $2 billion annual increments for five years beginning in 2016.
Once signed into law, this legislation will provide certainty as to the federal government’s role as a backstop with respect to terrorism risk insurance.
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