Stakeholders seeking reauthorization of the Terrorism RiskInsurance Act (TRIA) are holding an emergency meeting today todiscuss next steps in the wake of an alarming draft House bill thatwould effectively phase out the program over three years.

“It is about to get ugly,” was the way a key industry lobbyistsummed up the draft of the Terrorism Risk Insurance ModernizationAct (TRIM) proposal.

The meeting will be held at 3 p.m. in the offices of the Chamberof Commerce. Representatives of insurers, insureds, and agents andbrokers, as well as such allied industries as mortgage bankers andcommercial real estate interests, will be attending, according toindustry officials.

The bill is in sharp contrast to legislation likely to be votedon later this month by the Senate Banking Committee that wouldreauthorize the program for another seven years based on thecurrent version of the program, which expires Dec. 31.

Of greatest concern to industry is that reauthorization of TRIAis now caught up in a tug-of-war for control of the House beingwaged between Republican pragmatists and ideologues. Theconservatives have made House leadership support of their severerollback in government involvement in terrorismrisk insurance as a litmus test of conservative support forleadership re-election in the next Congress.

TRIM, as it is being called, is the product of conservativeresentment of, among other things, enactment of legislation lastmonth that will roll back actuarial rates imposed on customers ofthe National Flood Insurance Program mandated through a 2012 law.

TRIM was crafted by the Republican staff of the House FinancialServices at the request of Rep. Jeb Hensarling, R-Texas, chairmanof the panel, and Rep Randy Neugebauer, R-Texas, chairman of theFinancial Services panel's Housing and Insurance Subcommittee.Neugebauerer is telling industry officials the bill will beintroduced within three weeks.

Worse for the industry, they have secured support for their billfrom Rep. Eric Cantor, R-Va., House majority leader. It was Cantorwhose support was crucial to the enactment of the flood bill. Hedid so after officials of at least 22 states as well as suchpolitical contributors as the housing and real estate industry,said implementation of the 2012 bill would generate a severedownturn in the housing market.

The TRIM Act, as drafted, would bar any federal coverage for anyevent—other than that caused by a nuclear, biological, chemical, orradiation attack—of less than $500 million after the initial,three-year phase-in period. Essentially, the program trigger of$100 million per year before federal payments can be made would beretained only for NCBR-certified acts beginning in 2016. Fornon-NCBR acts, the trigger would rise to $250 million beginning in2016, rising to $500 million in 2017.

For NBCR certified acts, the TRIM Act retain the federalcopayment share of 85% insured losses after the trigger and aninsurer's deductible have been met. For non-NBCR certified actsonly, it would decrease the federal copayment share to 80 percentof insured losses beginning in 2016 and decrease the federalcopayment share to 75% of insured losses beginning in2017.

The bill would also require insurers to deposit 50% of terrorismrisk insurance premiums in a special fund that would beadministered by the Treasury Department.

The House bill comes at a time when insurers, insureds, andagents and brokers are warning that continued uncertainty overreauthorization of the program is impacting renewals of allproperty insurance policies. For example, from the foreignperspective, U.S. insurers and reinsurers need to redouble effortsto explain the importance of renewing the TRIA, according to aLondon-based managing general agent. The renewal process forTRIA this time “does feel more uncertain than the last one,” saidJulian Barker, senior underwriter at Aqua, a London-based specialtymanaging general agent, in comments to PC360.

He said it has been 12 years since the original TRIA legislationwas passed and seven years since the last renewal. “In that time,the personnel that originally enacted the bill may have moved on,and so it is likely that there needs to be an education processaround the original reasoning behind the original bill,” Barkersaid.