Witness at the hearing included:
- Mr. Baird Webel, Specialist in Financial Economics, Congressional Research Service (CRS)
- Mrs. Elizabeth Heck, Chairman, President, and Chief Executive Officer, Greater New York Insurance Companies, on behalf of National Association of Mutual Insurance Companies
- Ms. Michelle Sartain, President, Marsh U.S. and Canada
- Mr. Jason Schupp, Founder and Managing Member, Centers for Better Insurance, LLC
- Commissioner Andrew N. Mais, Connecticut Insurance Department, on behalf of National Association of Insurance Commissioners
Questions from other lawmakers focused on whether TRIA remains necessary and what the implications would be for the private insurance market if the program were allowed to expire.
- The witnesses largely agreed that TRIA must exist for the terrorism insurance market to exist. Members and witnesses noted the immediate aftermath of 9-11 demonstrated the market could not function without a backstop.
- Several witnesses underscored the importance on how advanced reauthorization is necessary so insurers and reinsurers can make capital allocation decisions and policyholders can make business decisions, such as breaking ground on new buildings.
- Members of Congress from across the country echoed Rep. Cleaver’s point that TRIA is essential in every state.
Other topics of note:
- Cyber Coverage:
- Rep. Ritchie Torres (D-NY) focused his questions on cyber-warfare and cyber attacks and how TRIA classifies these attacks. Witness Schupp said that cyber could be included under TRIA, but the Treasury Secretary has the unreviewable authority to certify what attacks qualify.
- Rep. Andrew Garbarino (R-NY) said that a cyber insurance backstop could be necessary, but it should be a separate process and not tied to TRIA.
- Bank and Lender Risk: Rep. Troy Downing (R-MT), a former insurance commissioner, pressed witness Baird Webel from the Congressional Research Services on what a market would look like if a federal backstop were no longer needed.
- Absent a backstop, Webel suggested that banks and lenders would be taking the risk on balance sheet if they were forced into a choice of writing or not writing a loan without terrorism coverage.
- Captives: Rep. Nydia Velázquez (D-NY) questioned Schupp on the issue of captive insurers gaming the program. Schupp said that captive structures allow large companies to structure their premiums and deductibles to limit their risk while being eligible for large government payouts.
- Recoupment: Rep. John Rose (R-TN) expressed skepticism on the recoupment mechanism.
The bottom line: The hearing tone largely supports a smooth pathway to an early and long-term reauthorization. Still, the nature of a government backstop — even on a well-liked program like TRIA — may draw some critics as the legislation moves through the House and Senate.