Ending a 12-day lapse in the federal terrorism-insurance backstop, President Obama has signed into law a bill that reinstates the program and extends it for six years.
Obama signed the extension of the Terrorism Risk Insurance Act (TRIA) on Jan. 12, four days after the Senate had approved the measure by a strong 93-4 vote, shortly after the new Congress convened.
The House on Jan. 7 also had passed the measure overwhelmingly, by 416 to 5.
Industry officials had warned that if the program, which expired on Dec. 31, were not put back in place soon, it could hamper new construction projects.
The newly enacted bill is the same as the version that the House cleared in December. The measure ran aground in the Senate before the last Congress concluded, allowing the TRIA program to lapse at the end of the year.
Besides continuing the TRIA program through calendar year 2020, the new law gradually will raise the amount of terrorism-related insurance losses triggering the federal insurance backstop, to $200 million in 2020 from $100 million in 2014.
In addition, the statute increases insurers’ co-payments for losses exceeding their deductibles, in annual steps, to 20% in 2020, from 15% now.
Real estate, construction and insurance industry groups had been pushing to bring back the TRIA program.
Jeffrey DeBoer, Real Estate Roundtable president and CEO, said in a statement, “TRIA will not stop terrorists. It does allow all businesses of all types across the nation to secure the insurance and financing that is necessary to expand."
A Congressional Budget Office report, released on Jan. 6, said that the near-term effects of a TRIA lapse would be “modest.”
But longer-term, if the TRIA program were not extended, CBO said that “policy holders will probably have fewer insurers to choose from and will face higher premiums and lower coverage limits.”
CBO added, “Some businesses will lose or drop their coverage.” It also said that construction in high-risk areas “may be reduced.”
TRIA, a reaction to the Sept. 11, 2001, terrorist attacks, was enacted in 2002 and extended in 2005 and 2007.
Story updated on 1/13/15 a.m. with enactment of the bill.