By Ramsey Cox - 07/17/14 01:19 PM EDT
The Senate voted 93-4 Thursday to extend a terrorism insurance program that business groups say provides a critical backstop in the event of a catastrophic attack.
The bill would extend the program, which was created in the aftermath of the Sept. 11, 2001, attacks, for seven years.
“Our economy is greatly affected by [the program],” Sen. Charles Schumer (D-N.Y.) said ahead of the vote. “If we were to not renew the terrorism insurance program, we will lose jobs.”
The fight over the terrorism insurance now shifts to the House, where Republicans are divided over whether the program should be changed to shift more of the financial risk to insurers.
The Terrorism Risk Insurance Act (TRIA) will expire at the end of the year unless Congress acts.
Renewal of the program is of particular importance for New York, where insurance costs skyrocketed for skyscrapers after 9/11, and other major cities with tourist attractions and stadiums that could be terrorist targets.
“I remember the dark days right after 9/11,” Schumer said. “The uncertainty that we faced in the immediate aftermath was that there would be no rebuilding.”
Supporters of the program say it provides certainty for cities to invest and build in high-risk projects, and argue the market for insurance would freeze up without it because terrorist threats are so difficult predict.
Critics question those claims and say the private market should be able to handle insuring against terrorism threats without government support.
In the House, Republicans are struggling to rally support around a five-year extension of the program passed by the House Financial Services Committee in June. That bill advanced on a partisan vote, and Democrats criticized several changes House Republicans wanted to make to the program.
Specifically, Democrats criticized the House bill for drawing a distinction between nuclear, biological, chemical or radiological attacks and other forms of terrorism. The latter attacks would face a higher threshold of damage before government support kicks in — damages would have to exceed $500 million in those attacks, as opposed to $100 million for more extreme events.
Major business groups have mounted a strong push to get TRIA extended with as few changes as possible, and Democrats, and some Republicans friendly to business or in high-profile areas, have pushed for a clean bill.
The Senate bill makes a few minor changes to the program. Currently, the federal government covers 85 percent of insurers’ losses, but the new version would increase the insurers' co-pay to 20 percent, phased in over five years.
The Senate version also increases the mandatory recoupment threshold from $27.5 billion to $37.5 billion, meaning if an insurers’ losses are less than $37.5 billion, the government is required to recoup its payments.
Sen. Mike Crapo (R-Idaho), a lead sponsor of the bill, said the legislation strikes a balance between federal and private sector investments in order to protect taxpayer dollars.
The Senate considered four amendments to the bill before final passage:
• Sen. Jeff Flake’s (R-Ariz.) amendment establishes an Advisory Committee on Risk-Sharing Mechanisms to reduce dependency on the federal government and get more private capital investments. That amendment passed on a 97-0 vote.
• Sen. David Vitter’s (R-La.) amendment requires the Federal Reserve Board of Governors to have a member that has previous experience in community banking. His amendment passed by voice vote.
• Sen. Jon Tester’s (D-Mont.) amendment creates a National Association of Registered Agents and Brokers to issue licenses to allow brokers to operate outside the state they are registered. He said it would streamline the system by creating a national standard. It passed by voice-vote.
• Sen. Tom Coburn’s (R-Okla.) amendment would allow the Treasury secretary to extend the deadline up to 10 years for recouping loss premiums if they total more than $1 billion. Schumer said the amendment violated the pay-go rule and greatly increased the cost of the bill. Schumer raised a budget point of order on the amendment and Coburn failed to get the 60 votes needed to waive the budget point of order.
— This story was last updated at 1:46 p.m.