Senate action on renewal of the Terrorism Risk Insurance Act (TRIA), whose authorization runs out Dec. 31, expected to come in the next several weeks, is something the life industry should pay attention to.
The life insurance industry lost the battle to be included early on, in November 2002. Congress has shown no interest whatsoever in adding protection for life insurers from a terrorist event since then, albeit how logical that might seem. For example, the Boston Marathon clearly pointed out two important things: terrorism could be home-grown, and the human toll could be high. However, I don’t think the life insurance industry believes that pointing this out to members of Congress will have any impact.
However, it shouldn’t take a rocket scientist to realize that life insurance interests, and the insurance industry in general, are maneuvering to use Senate action on reauthorization of TRIA as a vehicle to pursue their own agenda.
First, both members of Congress and officials of the National Association of Insurance Commissioners are making no secret that they want to re-establish the states as primary insurance regulators, both in shaping international regulatory standards and reducing the voice of the Federal Insurance Office and the Federal Reserve Board in insurance regulatory affairs.
TRIA reauthorization legislation, as the likely only remaining vehicle Congress will have to deal with insurance issues, is seen as the ideal vehicle to rework Sen. Susan Collins’, R-Maine, amendment to the Dodd-Frank Act (DFA) – the so-called “Collins amendment” — not only directly, but also by adding language limiting the authority of the Fed and the Federal Insurance Office to oversee insurance that revisits federal powers granted through the DFA.
The second is using TRIA reauthorization legislation to re-establish the National Association of Registered Agents and Brokers (NARAB). That has already passed the Senate this year, as part of S. 1926, the legislation the Senate wanted use to effectively repeal the disastrous Biggert-Waters Act of 2012, legislation which phased-in actuarial rates for the National Flood Insurance Program.
However, S. 1926 fell by the wayside as Congress decided to use the House version of the B-W repeal legislation as the vehicle to rid itself of that political albatross.
Conservative House members are joining NAIC officials in arguing that DFA reforms were not subjected to a cost-benefit analysis before they were enacted, they question the need to globalize a holding company capital standard, and they fear that a potential requirement for state insurance regulators to use such a standard would hurt U.S. insurers and consumers.