By Emily Stephenson
WASHINGTON (Reuters) – The U.S. Senate voted overwhelmingly on Thursday to reauthorize a federal terrorism risk insurance program that was created after the Sept. 11, 2001, attacks.
Senators voted 93-4 in favor of a bill that gives the federal insurance backstop seven more years. Businesses, owners of sports stadiums and other groups that insure against the risk of terrorist acts have urged lawmakers to renew the program before it expires at the end of the year.
“In a post-9/11 New York, terrorism risk insurance has proven to be an absolutely essential partnership between the government and the private sector that has turned rebuilding downtown Manhattan from a question to a certainty,” Senator Chuck Schumer, a New York Democrat and one of the bill’s sponsors, said in a statement after the vote.
The extension needs to be approved by the U.S. House of Representatives, which has struggled to agree on a reauthorization plan.
The program was established after the 2001 attacks, when insurers suffered steep losses and some stopped offering terrorism risk insurance on commercial buildings.
Congress stepped in with the Terrorism Risk Insurance Act, or TRIA. Under the program, insurers must offer certain types of terrorism risk coverage. If losses from an attack exceed a set amount, the federal backstop kicks in. The program has been reauthorized twice.
TRIA’s renewal faces a tougher hurdle this year in the House, where conservatives including Representative Jeb Hensarling of Texas have argued for winding the program down. Hensarling’s financial services committee voted to give the program five more years and to increase the amount of losses needed to trigger the federal backstop, among other changes.
But many Democrats and some Republican backers of TRIA have opposed those changes, so the House has been unable to vote on a renewal plan. House leaders on Thursday said an extension bill could go before the full body as soon as next week.
The White House said on Thursday it supported the Senate version of the bill. The Senate legislation includes an amendment to the TRIA bill that would require the U.S. Federal Reserve to have at least one board member with community bank experience. Small banks have complained that parts of the 2010 Dodd-Frank oversight law place too much burden on them and that regulators do not understand their business models.
Lawmakers from both parties have sided with the small banks, urging the White House to nominate a community bank expert to an open Fed seat.
“The Fed’s role in bank supervision has greatly expanded, but Fed membership has dramatically shifted away from community bank experience and toward academic and economist experience,” said Senator David Vitter, a Louisiana Republican who introduced the Fed amendment.
The Senate also approved an amendment to create an organization that would allow agents to more easily sell insurance across state lines.
(Reporting by Emily Stephenson; Editing by Doina Chiacu)