By Kevin Bogardus - 07/18/13 08:16 PM EDT
“You really got to work it the old-fashioned way,” Pusey said. “We do have a lot of new members of Congress … who are unfamiliar with this program. I think it’s perfectly possible that they will lump it in with other programs and form an opinion about it so we felt like it was really important to get up there early as we could.”
Pusey said insurers might have to wait until next year for the program to be renewed, however.
“I’m optimistic that it gets done in ’14 before the program expires, but I’m not optimistic that it gets done this year just because of the crowded agenda,” Pusey said.
First passed in 2002, the terrorism insurance program has been extended twice by Congress. Pusey described the program as a partnership between the federal government and insurers, and said the industry has “pretty significant skin in the game.”
Once insurers meet certain thresholds, the federal government can pay for 85 percent of coverage for terrorist attacks if the damage exceeds $100 million under TRIA. The government can recoup its losses over time by charging insurers fees.
Insurance lobbyists argue the law has provided certainty to the market and allows major landmarks and buildings to secure coverage. They argue that insurers can’t effectively model the risk of terrorism, given the potential for billions of dollars in damages.
Lawmakers are giving attention to TRIA, especially in light of the Boston Marathon bombing this year.
“It did elevate the issue, and it did give it some attention,” Pusey said of Boston bombing.” We have tried to be responsive to that and use it as a reminder that this is an ever-present danger.”
Conservative House Republicans are expected to resist renewing TRIA. But Pusey said that resistance is based in part on questions about the program that AIA is helping to answer.
“We have to get our fiscal house in order. We have got a lot of government programs. What is this one, how does it work, is it necessary, and is it something the private market could do better? So fortunately, the resistance is generally one of inquisition, one of questioning,” Pusey said.
Some of the challenge to the industry has come from House Financial Services Committee Chairman Jeb Hensarling (R-Texas), a fan of the private market who has targeted a number of government programs.
“There is some resistance there,” Pusey said, noting Hensarling met recently with AIA’s board of directors. “I think challenging the industry to make its case for TRIA — and that industry being defined not just as insurers but the policyholders’ community as well — to make the case for the program. That’s what I hear him doing, and I think that’s a fair thing for him to challenge us on.”
The insurance trade group leader said lobbying has picked up on the issue already this year on what could be a big fight between business and Congress in 2014.
“The intensity is definitely stepping up, and we have seen that even from the policyholder side,” Pusey said.