S-4395-119
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sponsored by David McCormick (R-PA)
What it does
This bill would extend the Terrorism Risk Insurance Program (TRIP) — a federal backstop for private insurers covering losses from terrorist attacks — from its current expiration date of 2027 to 2034, a seven-year extension. It would also update the mandatory recoupment schedule, which governs how and when the federal government recoups any payouts made under the program, shifting all relevant deadlines forward by seven years to align with the new expiration date. The bill makes no changes to coverage levels, trigger thresholds, or program structure.
Who benefits
Commercial property and casualty insurers who can continue offering terrorism coverage with a federal backstop, reducing their exposure to catastrophic losses. Businesses — particularly in high-risk urban areas, large commercial real estate, sports venues, hotels, and financial institutions — that rely on terrorism insurance to secure financing and meet contractual obligations. Commercial mortgage lenders and real estate investors who require terrorism coverage as a loan condition. Construction and infrastructure project developers. Workers in the insurance industry whose jobs depend on continued program operation. Taxpayers, to the extent the recoupment mechanism limits net federal outlays after a covered event.
Who is hurt
Private reinsurance markets, which may face reduced demand for terrorism reinsurance products as long as the federal backstop exists, limiting their ability to grow this market segment. Taxpayers who would bear residual financial risk if a covered terrorist attack occurs and recoupment does not fully recover federal outlays. Smaller insurers or new market entrants who might develop innovative private-sector terrorism coverage solutions if the federal program were allowed to expire. Policyholders in low-risk areas who may indirectly subsidize coverage for high-risk urban properties through the program's structure.
Supporters argue
Supporters argue that private insurance markets have never fully priced or absorbed catastrophic terrorism risk on their own — a reality demonstrated when nearly all insurers excluded terrorism coverage after the September 11, 2001 attacks caused over $40 billion in insured losses. They contend that without TRIP, large commercial real estate transactions, infrastructure projects, and major public events would face financing gaps, as lenders routinely require terrorism coverage. The program's recoupment mechanism, they argue, ensures the federal government is paid back after any payout, making it a financial backstop rather than a subsidy in most scenarios.
Opponents argue
Opponents argue that TRIP has been continuously reauthorized since 2002 and that over two decades of federal backing has prevented private reinsurance markets from developing the capacity and pricing tools to handle terrorism risk independently. They contend that each extension delays the market discipline needed to build a sustainable private solution, and that taxpayers remain exposed to potentially enormous unrecouped losses in the event of a large-scale attack — a risk that should be priced and borne by the private sector. Critics also argue that the program disproportionately benefits large commercial real estate and financial interests rather than the broader public.
Constitutional context
This bill operates squarely within Congress's Commerce Clause authority (Art. I, §8, cl. 3) to regulate interstate insurance markets, an area with well-established federal precedent. No significant constitutional tension is present; the bill modifies an existing, judicially uncontested program and does not delegate new or expansive rulemaking authority to agencies in a way that would implicate the major questions doctrine under West Virginia v. EPA (2022) or post-Loper Bright scrutiny.
Checks and balances
Congress retains authority over the program's structure and expiration; the Treasury Department administers the backstop and recoupment process; no significant shift in inter-branch power occurs under this bill.
Historical precedent
The Terrorism Risk Insurance Act was originally enacted in 2002 following the September 11 attacks and has been reauthorized multiple times — in 2005, 2007, 2015, and 2019 — each time extending the program for periods ranging from two to seven years.