Mr. Speaker, too often Congress reflexively renews sprawling federal backstops that the market no longer needs--quietly gambling with taxpayers' exposure to potentially massive losses while ignoring the absence of any real market…
Mr. Speaker, too often Congress reflexively renews sprawling federal backstops that the market no longer needs--quietly gambling with taxpayers' exposure to potentially massive losses while ignoring the absence of any real market breakdown. This TRIA reauthorization fits the pattern perfectly: another automatic green light for an open-ended federal guarantee, despite no evidence of a genuine market failure.
I think it's important to recall exactly what Congress intended when it created the Terrorism Risk Insurance Act, or TRIA. The statute laid out that the program was established as ``. . . a temporary federal program that provides for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism, in order to (1) protect consumers by addressing market disruptions and ensure the continued widespread availability and affordability of property and casualty insurance for terrorism risk; and (2) allow for a transitional period for the private markets to stabilize, resume pricing of such insurance, and build capacity to absorb any future losses, while preserving State insurance regulation and consumer protections.''
That's the law's own language--and the key phrase here is ``temporary federal program.'' TRIA was never meant to be permanent. It was designed to give the private market time to adjust, mature, and ultimately take full responsibility for insuring against terrorism risk. Yet here we are, twenty plus years later, marking up another long-term reauthorization that continues to rely on federal involvement instead of meaningfully reducing it.
I have great respect for my colleagues who have worked hard on this proposal, but I believe that H.R. 7128 misses an opportunity. Rather than putting TRIA on a path toward less government exposure and greater private-sector responsibility, this bill extends the federal backstop until December 31, 2034--nearly nine years from now. That's hardly consistent with the statute's intent of providing a ``transitional'' program.
I also believe that H.R. 7128 violates the spirit--if not the letter--of the House Republican floor protocols for the 119th Congress, particularly the requirement that federal programs be subject to a sunset ``not later than seven years'' after spending is first authorized or continued. Under Section 2, H.R. 7128 does not merely ``add seven years'' to a distant end date; it strikes ``2027'' and inserts ``2034,'' making this authorization effective as soon as the bill is enacted and keeping TRIA in force through the end of 2034.
In my view, the proper way to apply our Conference's seven-year sunset standard is to measure from when the reauthorized program actually takes effect--namely, when this bill is signed into law and TRIA's federal backstop is once again authorized. In other words, the ``clock'' should start when we newly authorize or continue the program, not from the old termination date written in prior law. Viewed that way, characterizing H.R. 7128 as a simple seven-year extension obscures the reality that Congress would be reauthorizing a significant federal program for nearly a decade at once, in tension with our Conference's stated commitment to regular review and reconsideration of federal spending and backstop authorities.
This is especially concerning given that, to date, TRIA has never been activated. In the 20 plus years since TRIA was enacted, there has not been a single Treasury-certified act of terrorism that met the program's financial trigger. Not once has the federal government been required to step in under TRIA.
Meanwhile, the private insurance industry has not just done well in this space--it has thrived under the shelter of a taxpayer-funded guarantee. According to the Treasury Department, from 2003 to 2023 insurers collected roughly $56.7 billion in terrorism risk premiums.
That is not the profile of a fragile market in need of permanent federal protection; it is evidence that insurers have the experience, capital, and appetite to keep cashing premium checks while the public absorbs the worst-case downside risks. In effect, taxpayers provide free reinsurance so that insurance carriers can book steady revenue and protect record surpluses--a classic example of privatized gains and socialized risk. Given this track record, the question is no longer whether insurance companies can begin to shoulder more of the risk, but why they have been allowed to avoid doing so for this long.
Yet instead of taking any meaningful steps to scale down taxpayer exposure or establish a serious glide path for an eventual federal exit, this bill simply extends the program nearly as-is. I find that deeply disappointing, because I do not believe the federal government should be in the business of permanently backstopping risks that the private sector is clearly capable of handling on its own.
It did not have to be this way. I offered an amendment that I believe would have greatly improved this bill by beginning the long-overdue process of shifting more terrorism risk off taxpayers and back onto the well-capitalized insurance industry where it belongs.
First, my amendment would have reduced the federal cost share. Under current law, the federal government covers 80 percent of covered losses above insurer deductibles. My amendment would have reset that share to 75 percent and then ratcheted it down by 1 percentage point a year until it reached 70 percent. This would have created a gradual, predictable glide path that would give insurers time to adjust while steadily reducing federal exposure and putting more responsibility back on the private market where it belongs.
Second, my amendment would have reduced the circumstances under which taxpayers are forced to step in. Under current law, the program trigger remains frozen at $200 million. My amendment would have raised that trigger by $10 million per year until it reached $250 million, and then indexed it to inflation using a benchmark selected by the Treasury Secretary through a rulemaking process. That approach would have kept the trigger aligned with economic reality instead of shrinking in real terms and quietly expanding the federal role, ensuring that more of the risk stays with insurers rather than being shifted to taxpayers.
Third, my amendment would have shortened the length of the reauthorization by changing the program termination date to five years after enactment. Five years provides ample certainty for markets, but it also respects the fact that TRIA was supposed to be temporary, and that Congress should regularly revisit the scope of federal involvement.
Fourth, my amendment would have forced Treasury to do the serious homework this bill avoids, laying out how, within a few years, we could dramatically reduce taxpayer risk and make the industry shoulder a larger share of the costs. It would have directed Treasury to study how an annual participation fee on insurers in TRIA could be structured, including options that generate substantial aggregate fees and deposit them into a dedicated fund at Treasury that can be used solely to cover future federal outlays or reimbursements under the program. The study would have been required to examine fee designs that are proportionate to insurer size and premiums, so that
large national carriers shoulder the largest share while small and regional insurers are not disproportionately burdened.
It also would have evaluated whether a carefully designed opt-out for small insurers from the mandatory availability requirement could work without undermining the long-term health of the program. Treasury would then have been required to report back to the Financial Services Committee with concrete findings and legislative options, giving us real data to build a system that shifts more risk off taxpayers and onto the well-capitalized insurance companies that benefit from TRIA.
My amendment would not have pulled the rug out from under anyone; it simply asked the insurance industry to start standing on its own two feet. It took modest, measured steps to ratchet down the federal share, raise and index the trigger, shorten a long-term reauthorization, and finally force a serious conversation about a participation fee and dedicated fund that would put taxpayers ahead of industry convenience.
When Congress tells the public a program will be temporary, we incur more than a procedural obligation--we make a promise. In TRIA's case, there is no ambiguity about that promise: the statute itself describes it as a temporary federal program. The Members of Congress considering this legislation have, in my view, a covenant with our predecessors who first authorized TRIA on that basis. To honor that covenant, we must either set this program on a genuine path of reform, as my amendment would have done, or have the courage to let it expire. A long-term extension with only minimal changes does not satisfy that obligation.
I want to thank Chairman Flood and Chairman Hill for their leadership and for their efforts to maintain stability in this space, and I appreciate their willingness to engage in this important discussion. But when we shrink from doing the difficult things; when we refuse to challenge an industry all too eager to cash terrorism insurance premium checks backed by taxpayers; when we cannot even agree on modest, common-sense reforms to a backstop that has never once been triggered, we miss a rare opportunity to leave the terrorism insurance marketplace stronger and more accountable than we found it. For all of these reasons, I must oppose H.R. 7128 in its current form.
