The most recent reauthorization, passed in 2019, extended the program through December 31, 2027. The new legislation would provide a longer runway by continuing it through 2034.

How the Backstop Works

Under the current framework described by the Congressional Research Service, an event must first be certified by the Secretary of the Treasury as an act of terrorism and must meet statutory requirements.

Even then, federal loss-sharing does not begin automatically. A certified event must cause more than $5 million in losses, and aggregate industry-wide insured terrorism losses must exceed $200 million before the federal sharing mechanism is triggered.

Insurers also have their own deductibles. CRS describes the deductible as 20 percent of an insurer’s premiums from TRIP-eligible lines of insurance before federal reimbursement applies.

Only after those requirements are met can the federal government reimburse a portion of eligible losses above the insurer’s deductible. The design is meant to prevent routine reliance on federal support while preserving a safety net for losses that could threaten market stability.

The House bill would not simply extend the date. According to a CRS analysis of the amended version of H.R. 7128, the legislation would also raise the required loss amount for certification from $5 million to $10 million beginning in 2029. It would add notice requirements for the Treasury Department during the certification process and make changes related to recoupment of federal payments.

Recoupment matters because some government payments can be recovered later through surcharges imposed on insurers after a qualifying event. That feature is intended to limit the extent to which losses become a permanent taxpayer burden.