In an extremely disappointing development, the U.S. Senate adjourned for the year and concluded the 113^th Congress without bringing S. 2244, the “Terrorism Risk Insurance Reauthorization Act,” up for a vote by the full body.

This legislation would have extended the Terrorism Risk Insurance Act (TRIA) program for six years and also included the National Association of Registered Agents and Brokers (NARAB II) legislation that would have established a permanent NARAB. The House passed this exact same measure last week with an overwhelming bipartisan 417–7 vote.   

In addition to reauthorizing the TRIA program for six years, the bill would have raised the necessary trigger amount in total losses from the current $100 million to $200 million, over five years, beginning in calendar year 2016. Over the same time period, the legislation would have also raised the mandatory recoupment from $27.5 billion to $37.5 billion, increasing by $2 billion each year and the private industry recoupment total for all events from the current 133% to 140% of covered losses.

The legislation would have removed the Secretary of State from the certification of acts of terrorism process and stated that the Treasury Secretary must consult with the Secretary of Homeland Security in order to certify an act of terrorism. The bill also included a provision making changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act. This provision would have exempted end users from Commodity Futures Trading Commission and Securities and Exchange Commission swaps margins requirements.

Furthermore, the legislation included NARAB II language, which would achieve much-needed reciprocity in producer licensing and help policyholders by permitting greater competition among agents and brokers. This legislation would build upon regulatory experience at the state level, promote greater consistency in agent and agency licensing and ease the burden many agents face in doing business across state lines.

While there is plenty of blame to go around, at the end of the day, Senate leadership refused to stay in town to overcome the objection of one senator: Sen. Tom Coburn (R-Oklahoma), who is retiring this session. Sen. Coburn objected to the NARAB II provision and specifically wanted states to have the ability to “opt out” of NARAB. This change would have eliminated the efficacy of the bill for independent agents and their customers and had already been overwhelmingly rejected by the Senate Banking Committee and the full Senate earlier in the year. While Sen. Coburn had a “hold” on the legislative package, Senate leadership could have overcome this had they chosen to devote the necessary time on the floor by invoking cloture and staying in town several additional days.

The Big “I” is already working with the rest of the industry and policyholder community to push for consideration of both pieces of legislation early next year.

Neither the marketplace nor regulators projected the expiration of the program. Individual insurers will likely decide how to handle terrorism insurance coverage after Dec. 31, 2014 based on their specific exposures, risk diversification, capital and access to the limited private reinsurance market for terrorism risk. Company decisions will also likely center on a calculation regarding the prospects for Congressional action on TRIA early next year.

Additionally, the Treasury Department may issue guidance in the coming days on the effects of the expiration, and the National Association of Insurance Commissioners already has a working group in place that will sort through the impact. The upcoming expiration of the Terrorism Risk Insurance Program has also prompted the Insurance Services Office to announce today it will activate ISO's conditional commercial policy contract language to address terrorism coverage. The Big “I” will be sure to pass along pertinent information as it becomes available.

Wyatt Stewart is Big “I” director of federal government affairs. John Prible is Big “I” vice president of federal government affairs.