WASHINGTON–The Bush administration threatened today to vetolegislation extending the Terrorism Risk Insurance Act in the formexpected to pass the House tomorrow unless it is drastically scaledback before it reaches the president's desk.

However, despite the categorical denunciation of all theprovisions in the House bill it considers excessive, theadministration in its “statement of position” for the first timeexplicitly stated it would accept some form of extension of theprogram beyond its current expiration date of Dec. 31.

“The administration is willing to work with Congress as the billmoves through the legislative process so that H.R. 2761 meets thecritical elements of an acceptable extension,” the letterconcluded.

This constitutes a change in position for the administration,which earlier had repeatedly insisted the program sunset inDecember.

The House bill, H.R. 2761, was before the House Rules Committeetoday so rules could be set for debating the bill tomorrow, as wellas determining which proposed amendments to the existing text willbe cleared for floor debate.

In advance of tomorrow's vote, the Property Casualty InsurersAssociation of America implored Congress to act promptly to extendthe program promptly.

“TRIA is absolutely vital to our economy, and it needs to berenewed before its expiration date,” said Ben McKay, PCI's seniorvice president, federal government relations. “After 9/11, therewas a slowdown in commercial building because terrorism is anuninsurable risk. TRIA helped make terrorism insurance availableand affordable. The program has worked, and it continues to work.It would hurt our economy if we allow this much-needed program tolapse.”

In its veto letter, the administration explained that TRIA wasonly intended to be a temporary mechanism to allow the market toadapt “in the short run” to the economic dislocations resultingfrom the attack on Sept. 11, 2001.

“Therefore, the administration opposes the legislation's 15-yearextension,” the administration position paper said. “Instead, theprogram should be phased out in the near future.”

It said the House bill “unnecessarily” expands the program byincluding group life insurance and by adding domestic terrorismcoverage.

“The insurance market for these risks has remained robust andcompetitive since TRIA's inception, even absent a federalbackstop,” the letter said. “Adding these insurance coverages tothe federal reinsurance backstop sends the wrong signal to themarketplace, which instead should be encouraged to find new ways todiversify the risks of doing business.”