Updated: Robert Costa, a Washington Post reporter, said on Twitter today that Hensarling has decided not to run, leaving Rep. Pete Sessions (R-Tex.), chairman of the House Rules Committee, as the only likely opponent against McCarthy.
The resignation of Eric Cantor as House Majority Leader, following his stunning primary defeat to a neoconservative would lead a pundit, with a background as a meteorologist, to say the outlook for prompt passage of legislation sought by both the life and property and casualty insurance industries is cloudy at best. Indeed, Cantor’s precipitous fall from grace could lead some meteorologists to put up storm warnings in terms of the outlook for passage of insurance legislation preferred by insurers.
That’s because Cantor’s defeat will strengthen the ability of conservatives demanding a lesser role for the federal government to push through legislation weakening the Terrorist Risk Insurance Act (TRIA), whose reauthorization is by far the No. 1 priority for the P&C industry. The current program ends Dec. 31, 2014. This would also impact passage of legislation that would clarify that the Federal Reserve can use insurance metrics in overseeing insurance companies.
For example, in comments last week, Rep. Peter T. King, R-N.Y., stated specifically that the strategy of House Republican moderates is to get the weakened House version of TRIA renewal legislation through the House Financial Services Committee (FSC), then replace it with the help of moderate Republicans and Democrats, with the Senate version of the bill.
Given that Rep. Jeb Hensarling, R-Texas, current chairman of the House FSC and a prime supporter of the Terrorism Risk Insurance Modernization Act or TRIM Act, is going to be a candidate to succeed Cantor, that strategy now faces long odds. “There are many ways to advance the causes of freedom and free enterprise, and I am prayerfully considering the best way I can serve in those efforts,” Hensarling said, confirming last week that he wants to replace Cantor.
King also touched on it in comments in the New York Times. King said Cantor’s defeat will put an immigration overhaul even further out of reach, something that would hurt Republicans in the next presidential election when they will need to cut into the Democrats’ lead with immigrant and Latino voters. “The results tonight will move the party further to the right, which will marginalize us further as a national party,” Mr. King said.
The proposed House legislation, likely to be unveiled sometime this week, is TRIM Act. An initial draft, leaked to Republican members of the House FSC several weeks ago, would effectively phase out the current program and bar any federal coverage for any event other than that caused by a nuclear, biological, chemical radiation event for any event of less than $500 million after an initial, three-year phase-in period.
It is likely that House FSC Republicans would agree to a compromise that would extend the current program to perhaps five years. But, the glide path of the proposed legislation is for the insurance industry to accept far more liability for a terrorism event than underwriters, rating agencies and investors would deem prudent.
A Senate version of the bill was reported out unanimously last week by the Senate Banking Committee. It increases industry “skin in the game” by one-third over three years, which is already stirring concern within the industry, but it is seen as the most likely option in the current atmosphere. And, equally importantly, it would extend the program for another seven years. The bill is S. 2244, the Terrorism Risk Insurance Program Reauthorization Act of 2014.