Federal involvement in health insurance has been controversial on Capitol Hill, but Republicans and Democrats in Congress have shown few qualms about getting involved when it comes to the private terrorism-insurance market.
With little fanfare, both chambers have advanced bills through committee to extend a law first approved after the Sept. 11 attacks that ensures the government will cover certain losses resulting from acts of terrorism.
The Terrorism Risk Insurance Act, signed in 2002 and renewed in 2005 and 2007, says the federal government will cover 85 percent of claims made in any terrorist attack where damages exceed $100 million. The goal was to entice insurers back into the market after many of them fled, chastened by the $30 billion in claims paid out after the 2001 attack.
Absent congressional action, the act will expire Dec. 31, 2014.
"It needs to be reauthorized as soon as possible because businesses across the country already are evaluating whether they will be able to pursue development and expansion plans if TRIA isn't reauthorized," said Martin Depoy, the steering committee coordinator for the Coalition to Insure Against Terrorism.
The House Financial Services Committee and Senate Banking Committee have advanced competing versions.
The Senate bill, sponsored by Sen. Charles E. Schumer, New York Democrat, would keep the current plan largely intact, although it would increase the share of insured losses paid for by private insurance and direct the government to study the effects of premiums collected through the program.
The Congressional Budget Office projects that the bill would have no long-term effect on the federal deficit. Any would-be government losses in the event of an attack would be canceled out by surcharges the government imposes on certain policyholders.
But House Republicans want bigger policy changes.
Their bill, introduced by Rep. Randy Neugebauer, Texas Republican, would let some small insurers request opting out of the requirement that if they offer commercial property and casualty insurance, they also offer coverage for terrorist attacks.
The House bill would also gradually increase the trigger for federal coverage from $100 million to $500 million, and create a separate $100 million trigger for federal aid in cases of nuclear, chemical, biological or radiological terrorist attacks.
The Senate version would reauthorize the program through 2021 and the House version would extend it through 2019.
Adam Hamm, president of the National Association of Insurance Commissioners, said he was happy to see movement in Congress, but cautioned against creating separate triggers, as the House bill does.
Meanwhile, some conservative pressure groups have argued it's time for the federal government to get out of the business.
David Inserra, who studies homeland security policy at the Heritage Foundation, said the program was always meant to be temporary and is actually preventing the private insurance market from making its own adjustments to take terrorism risk into consideration.
"We would like to see the market work on its own — see how it stands on its own two feet here," he said.
A new report from the Congressional Research Service says the law has helped push prices for terrorism insurance downward and that 60 percent of commercial policyholders have purchased coverage over the last several years.
But the report also says there has been little progress in trying to find a private sector solution that wouldn't involve putting federal taxpayers on the hook.
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