CRAPO STATEMENT AT TERRORISM RISK INSURANCE PROGRAM MARKUP
June 3, 2014
WASHINGTON – U.S. Senator Mike Crapo (R-Idaho), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, today delivered the following remarks during a Banking Committee executive session to mark up the Terrorism Risk Insurance Program Reauthorization Act of 2014:
Thank you Mr. Chairman. Since the last hearing on the Terrorism Risk Insurance Act, we have worked together to develop a bipartisan approach to reauthorizing this program. As a co-sponsor of this legislation, I appreciate all the efforts of Senators Schumer, Kirk, Heller and Chairman Johnson to provide an effective TRIA program that will help limit the damage of any future terrorist attack and make our economy more resilient.
The TRIA program allows the insurance industry to absorb and cover the losses of all but the largest acts of terror, ones in which the federal government would likely be forced to step in were the program not there.
As part of this reauthorization, I and others pushed to decrease the size of the backstop. In order to do that, we have examined each of the policy levers in the program.
This bill would increase the insurance industry’s aggregate retention level, and the company coinsurance level. As the program stands today, the federal government would recoup any TRIA payments up to $27.5 billion through post-event payments.
This industry retention level allows the taxpayer to recover TRIA payments through an industry-wide assessment on property casualty policies, and was last changed in the 2005 reauthorization. The bill we will mark up today increases that level by $2 billion a year, to a level of $37.5 billion, an additional $10 billion. This is a significant reduction in the potential cost to taxpayers.
In addition, the bill increases the company coinsurance level. The coinsurance levels will rise from 15 percent to 20 percent over five years. This means that before the backstop is reached, each company will take on a greater portion of losses above their deductible.
Again, I thank the Chairman and the cosponsors for developing a balanced extension to the program. Thank you Mr. Chairman.