The U.S. Treasury Department has extended the Terrorism RiskInsurance Act of 2002's "make available" requirement through 2005.The act, which was prompted by the terrorist attacks of Sept. 11,2001, established a three-year program to promote the recovery ofU.S. businesses following catastrophic terrorist attacks. Inexchange for the federal government's agreeing to shoulder a shareof the financial risk of future attacks, insurers were required tooffer terrorism coverage on commercial policies written during thefirst two years of the program, as well as to retain an escalatingfinancial burden of insured losses from a future attack.

Currently, Congress is considering whether to extend TRIA, whichexpires Dec. 31, 2005. The insurance industry has been vocal in itssupport of such an action. "Because Treasury has now decided thatcommercial insurers must make terrorism coverage available forpolicies written at any time during 2005, insurers andpolicyholders will be exposed during the part of the coverage termthat runs beyond TRIA," said Stef Zielezienski, vice president andassociate general counsel for the American Insurance Association."Policyholders, state insurance regulators, and insurers understandthat this potential mismatch between policy periods and TRIA'sexpiration makes it absolutely critical that Congress acts thisyear to extend TRIA beyond December 31, 2005."