With the mid-term elections behind us we can look into the captive insurance crystal ball and divine how our industry will fare on Capitol Hill in the year ahead… well, not really. I think one thing all the pundits can agree on is that not a lot will happen in the lame-duck session of Congress to the end of the year as the newly energized Republican leadership in the Senate will prefer to postpone any major actions that are not absolutely necessary for running the state until they control both the House and the Senate in January (and even those issues are not guaranteed to move before the end). So I suspect we will see some sort of TRIA extension, as well as little to no action on updating the Liability and Risk Retention Act (LRRA) and the technical correction to the Non-admitted and Reinsurance Reform Act (NRRA) passed in Dodd-Frank a few years ago.
It sounds like there may be some agreement between the two parties to make necessary adjustments to Dodd-Frank early next year. Both sides agree that there need to be some tweaks to fix issues that always arise when implementing policies at that magnitude. But it will still require that the Republican and Democratic leadership can keep the politics to a low boil.
In regards to TRIA reauthorization, House and Senate negotiators remained at an impasse this week, and not necessarily because of the partisanship we have seen over the past few years. As you know, initially enacted after the Sept. 11, 2001, terror attacks, the federal cost-sharing program that provides a backstop in the event of another catastrophic attack is set to expire at the end of 2014. The Senate version to reauthorize the program for seven years—approved 93-4 in July with nearly unanimous Senate Republican support—would be a better bill for the captive insurance industry. However, there is an ideological split within the GOP, with House Financial Services Committee Chair Jeb Hensarling (R-TX) opposing the Senate approach, and saying bigger changes are needed to protect taxpayers, and other Republicans, like Rep. Peter King (R-NY), urging the House to act—and openly questioning the continued opposition by some GOP colleagues. The business community has, for the most part, opposed Hensarling’s approach. And Republican leaders haven’t yet brought his bill to the floor for a vote—a sign of uncertainty that it would have even enough Republican support to pass. So like the way one sometimes feels from overdoing it on Thanksgiving, my crystal ball is equally hazy.
In other news, our good friends at the audit firm of Johnson Lambert elected John Prescott as the firm’s next Managing Partner. John will serve as Co-Managing Partner with Debbie Lambert beginning January 1, 2015 and will begin a five-year term as Managing Partner on January 1, 2016. Debbie will remain with the firm after stepping down as Managing Partner and will be returning primarily to a client service role.
Thank you all very much and I look forward to hearing from you!
THIS JUST IN!
Just before sending this blog post, we heard from Jim McIntyre, VCIA’s DC legislative counsel. Here is what he said about TRIA reauthorization:
Sen. Schumer and Rep. Hensarling have agreed on the outline of a reauthorization bill. They have tentatively agreed to the following outline, which could change:
- 6 year reauthorization;
- $200 million trigger, phased-in;
- 80-20 co-share;
- Study on bifurcation; and
- NARAB II (broker licensing)
They continue to discuss other issues such as certification and recoupment, a study on up front premiums, TRIA insurance data collection and the creation of a risk retention council. A final bill could be included in a larger government funding bill next week (currently looking at Wednesday) or voted on separately. With time running out, including it in the omnibus bill is the most probable. They are hoping to conclude the negotiations shortly.