TRIA Momentum Grows

Companies particularly affected are such firms as The Hartford and AIG, which have both life and p-c affiliates. The way the system currently operates, life and p-c premiums would be lumped together, thereby raising the deductible each company would have to absorb before federal aid kicked in.

A markup on such legislation is scheduled Sept. 29 before the full House Financial Services Committee, and broad bipartisan support is expected. The plan is then to move the bill through the House within the following 10 days, probably through the suspension calendar, according to Julie Gackenbach, assistant vice president, government relations, for the Property Casualty Insurers Association of America.

Rep. Mike Oxley, R-Ohio, chairman of the committee, indicated recently that enactment of the bill had become a priority for his panel.

“Rep. Oxley, by moving this quickly through the normal committee process, and on to the floor, is retaining all of his legislation options for moving the bill this year,” Gackenbach said.

Equally important, strong support for the legislation was evident as the Senate Banking Committee held a hearing on insurance regulation Wednesday. All senators except the chairman, Sen. Richard Shelby, R-Ala., voiced support for the bill. Shelby had indicated earlier in the week that he wanted to hold off action until next year because he wanted to hold a hearing on the issue. But, given the near-unanimous show of hands when members of the panel were asked to indicate their support for the bill by Sen. Charles Schumer, D-N.Y., it appears the chairman will go along with passage this year.

Only J. Robert Hunter, insurance director of the Consumer Federation of America, raised his hand when Sen. Schumer asked during the hearing who opposed extending TRIA.

“Senators get it that this needs to be done, and it needs to be done expeditiously,” Gackenbach said. “Our preference is to move this bill as soon as possible; were moving into some pretty significant dates for people seeking to negotiate new contracts. So, the earlier we can complete this action the better it is for policyholders and insurers.”

The bill to be taken up by the House committee was introduced in July by Reps. Richard Baker, R-La., chairman of the Capital Markets Subcommittee of the panel, and Pete Sessions, R-Texas. It would extend the current TRIA legislation for two years, retaining the 15% individual company retention level scheduled to go into effect Jan. 1, 2005 through 2006, and increase that to 20% in 2007.

Similar legislation has been introduced in the Senate by Sen. Robert Bennett, R-Utah, and Sen. Chris Dodd, D-Conn. The only concern with the bill is that it provides “no soft landing,” that is, there will be a hard cutoff date of Dec. 31, 2007, meaning that insurers extending contracts during 2007 would retain responsibility for paying claims during the period in 2008 until the contracts expire even though the federal backstop would no longer be availablethe same problem the industry is concerned with now. “It doesnt solve that problem,” Gackenbach said.

New York Insurance Superintendent Greg Serio, representing both the state and the NAIC as its chairman of the Government Affairs Task Force, also discussed the issue during the hearing. Serio said that “nothing more important” can be done than extending TRIA. “Time is of the essence in terms of promoting and moving TRIA along.”

Reproduced from National Underwriter Edition, September 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.