Treasury Department Extends Key Provision of Terrorism Risk Insurance Program
The Department of the Treasury announced on June 18, 2004 its decision to extend the “make available” provision of the Terrorism Risk Insurance Act (TRIA) through 2005. This provision requires that insurance companies make coverage for terrorist acts available in all of its commercial property and casualty insurance programs on the same terms that are applicable to losses not arising out of an act of terrorism. IREM had encouraged the extension of this provision during the April Capitol Hill Visits and in written commentary jointly submitted with the National Association of Realtors® and the CCIM Institute.

The TRIA was passed by Congress in 2002 to address the extreme difficulty and expense of finding coverage for acts of terrorism in the wake of the September 11, 2001 attacks on New York and Washington, DC. Under TRIA, the Department of Treasury (Treasury) caps insurer liability and would process claims and reimburse insurers for a large share of losses from terrorist acts that Treasury certified as meeting certain criteria. Hearings were held in May on the subject of extending the entire program beyond the current expiration date.

Flood Insurance Bill Passes House
December 2003
The House of Representatives has approved H.R. 253, a flood insurance repetitive-loss bill, and sent it to the Senate. The bill also provides for a multi-year reauthorization of the National Flood Insurance Program (NFIP). The current authorization of the NFIP will expire on December 31, 2003. The Senate will not take up H.R. 253 until next year. To ensure that the NFIP authorization will not lapse, Congress will pass a 3-month stopgap reauthorization prior to adjournment, which will ensure authorization of the federal flood insurance program through March 2004.

Tort Reform Legislation Likely by Early 2004
December 2003
Legislation closely watched and supported by IREM that would reform the way class action lawsuits are handled was passed by the House of Representatives earlier this year, but has come up short of the 60 votes needed to break a filibuster in the Senate. The bills, H.R. 1115 and S. 1751, would make important changes to the rules governing class action lawsuits, moving many lawsuits from state to federal courts and limiting a number of abusive practices, such as settlements that give plaintiffs nearly useless coupons or vouchers while their lawyers reap millions and the practice of filing lawsuits in courts most likely to award multimillion dollar judgments. After passing the House in mid-June, the bill failed to overcome a filibuster in the Senate by one vote in October. Since then, Senate Republicans have reportedly reached a compromise with 3 holdout Democrats, Senators Chuck Schumer (NY), Chris Dodd (CT), and Mary Landrieu (LA), that should assure the bill's passage, either in December or sometime in January.

Flood Bills Make Progress
July 2003
National Association of REALTORS^® staff met with House committee staff in early July to discuss a draft flood insurance repetitive-loss bill. Bill introduction and committee markup is anticipated in the near future. The intent of the bill is to increase flood insurance premiums for properties that are repeatedly flooded and refuse a government offer of mitigation assistance.

On a separate matter, Congress is well on its way towards approving the full $200 million requested by the Federal Emergency Management Agency (FEMA) for the modernization of its flood maps. The effort, begun in 1997, aims to completely update all 100,000 panels of the map and to publish them in an easy to use and update digital format. The funding has been approved by the full House of Representatives and by the Senate Appropriations Committee. Full Senate approval should occur within the next week or two.

NAR Insurance Task Force Releases Final Report
July 2003
The National Association of REALTORS^® has released the final report of its Insurance Task Force. After studying the causes of the rising costs and plummeting availability of property casualty insurance, the task force recommended a number of actions, including:

• the creation or expansion of state insurance FAIR plans to include basic homeowners and commercial property coverage;

• state legislation or regulation that would require insurance companies to file their credit-based insurance scoring methodology and formulas with the state department of insurance providing that such methodology and formulas are held confidential and treated as a trade secret under state law;

• that state associations consider opposing the use of credit scoring as the sole criteria for the acceptance, denial, renewal, or rating of a potential insured for insurance underwriting purposes;

• that the Fair Credit Reporting Act be amended to add consumer protections and to allow consumers access to one free annual credit report.

IREM legislative staff will review the task force's report with the aim of determining what actions, if any, are appropriate. The entire report can be found at:
http://www.realtor.org/GAPublic.nsf/Pages/insurecom?OpenDocument

NAR Insurance Task Force Meets With Major Insurers
April 2003
Members of the NAR Insurance Task Force met with the senior management of the State Farm, Allstate and Farmers Insurance at NAR headquarters in Chicago on March 12 and 13th. Among the issues discussed were the use of insurance credit scores, cancellation of insurance coverage after closings, and the potential for current insurer practices in response to water claims to create a new class of stigmatized properties. The meetings were part of the Insurance Task Force's efforts to identify what actions NAR might take to address the current difficult insurance market. The Task Force will report its final recommendations to the NAR Leadership Team and IREM will be assessing those recommendations to determine if they require any amendments to current IREM Statement of Policy.

Terrorism Insurance Not Required by the FHA
April 2003
HUD Secretary Martinez announced on March 11, 2003 that FHA will not require terrorism insurance for multifamily mortgages of less than $50 million. The requirement for properties over $50m will only apply to new mortgage applications and not existing mortgages. This threshold will be debated in a proposed rule to be released this spring.

Treasury Announces Executive Director of Terrorism Risk Insurance Program
April 2003
On March, 19, 2003, Treasury announced that Jeffrey S. Bragg, former Administrator of the Federal Insurance Administration during the Reagan Administration, has been named Executive Director of the Terrorism Risk Insurance Program (TRIP), established by the Terrorism Risk Insurance Act of 2002.

Beginning in April 2003, Mr. Bragg will be responsible for implementing the operation requirements of the Act, managing the TRIP program, and ensuring that an appropriate mechanism for processing claims for Federal payments under the Program is in place.

Mr. Bragg brings 25 years of experience in the insurance and insurance-related information technology industries. As former Administrator of the Federal Insurance Administration, he administered the National Flood Insurance Program, as well as the Federal Riot Reinsurance Program and the former Federal Crime Insurance Program.

Senate Overwhelmingly Approves Terrorism Bill HR 3210
January 2003
On Tuesday November 26, President Bush signed HR 3210 The Terrorism Risk Insurance Act of 2002. HR 3210 was approved by the House and Senate on November 19 with 86 yeas and 11 nays in the Senate during a late evening session.

HR 3210 becoming law is a major victory for both Commercial and Residential Realtors. They both will benefit by the additional reinsurance capacity that the bill will bring to the marketplace. Commercial lending liquidity should be substantially improved as well. It culminates a year of coordinated effort by CCIM Institute, NAR, the Institute of Real Estate Management (IREM) and the Coalition to Insure Against Terrorism (CIAT).

The new bill will be in force for three years through December 31, 2005. It mandates that property and casualty insurance policies in all 50 states must offer traditional terrorism insurance coverage. It voids all existing property and casualty insurance policy exclusions for traditional terrorism coverage.

The new bill will establish a Federal backstop for commercial property and casualty insurers arising from terrorism. Treasury will pay directly to insurers 90 percent of claims after insured losses exceed $10 billion in year 1, $12.5 billion in year 2, and $15 billion in year 3. Treasury will pay until insured losses exceed $100 billion.

The new bill will not have a Federal standard for the awarding of punitive damages in terror-related suits brought against property owners. As a result state laws on punitive damages will prevail. It does consolidate terror-related lawsuits in Federal court at both the pre-trial and trial phases.

Temporary Halt in Flood Insurance Availability
January 2003
The U.S. House adjourned for the year without reauthorizing the National Flood Insurance Program, which expired December 31, 2002. The earliest the program can be reauthorized is Jan. 7, 2003, when the 108th Congress convenes. This lapse in authority for the insurance program will impact REALTORS^® in one major way: If the purchase of a new flood insurance policy for a property is required, coverage will not be issued until Congress acts to extend the program in January. Without access to federal flood insurance policies, some property owners may see a delay in their financing approval. The Federal Emergency Management Agency has indicated that existing policies will still be effective and new policies will be issued if applications and premium payments are received on or before Dec. 31, 2002. NAR has brought together a coalition of interested stakeholders to ensure that Congress reauthorizes NFIP as quickly as possible.