In the heart of the Big “I” Legislative Conference last Thursday, Sen. Chuck Schumer (D-N.Y.) led five other U.S. Senators in jointly filing bipartisan legislation, S. 2244, pairing a seven-year extension of the Terrorism Risk Insurance Act (TRIA) program with two significant private sector cost-sharing reforms.

The bill is the first to be filed in the Senate this Congress and could not have come too soon, since the TRIA program is due to expire at the end of the year.

Initially authorized in the wake of the terrorist attacks of 9/11 and the ensuing turmoil in the commercial property-casualty insurance markets, the TRIA program has since been reauthorized in 2005 and 2007 with significant reforms in response to persisting problems with underwriting this unique risk.

The program is structured as a federal government reinsurance mechanism, which only kicks in if losses amount to more than $100 million. Each company is responsible for a deductible equal to 20% of earned premium before any taxpayer dollars are expended, and even then a 15% company copay is due up to a program cap of $100 billion. If losses amount to less than $27.5 billion, the private sector must repay any taxpayer dollars received at a rate of 133% through commercial policyholder surcharges.

In addition to providing for a seven-year extension, S. 2244 would gradually increase the company copay to 20% from the current 15% and increase the threshold for mandatory recoupment of taxpayer dollars to $37.5 billion from the current $27.5 billion. These reforms to the cost-sharing mechanisms would be implemented over the first five years of the bill.

The insurance industry largely applauded introduction of the extension bill, but expressed concern over the increased company copay in particular.

S. 2244 has been cosponsored by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and top Republican Mike Crapo (R-Idaho), signaling it is likely to be the product the Committee will eventually move through the legislative process. As of press time, the number of co-sponsors had already increased to 12.

The Big “I” is working closely with its real estate and insurance industry coalition partners to ensure an extension of this important program is crafted in a way that allows for the continued availability of coverage for terrorism risk in the commercial property-casualty marketplace.

Ryan Young is Big “I” senior director of federal government affairs.