Legislation was introduced in the Senate that would extend theTerrorism Risk Insurance Act for seven years—as the insuranceindustry wants. 

A positive vote early next month in the Senate Banking Committeeis expected. However, while the House's initial version might callfor major changes in the program including higher deductibles and ashorter reauthorization period, it appears likely the Senate bill,S.2244, will form the basis for the final legislation.

The current reauthorization expires Dec. 31.

The primary change in the existing bill, as noted by PC360, is to phase-in the initial "skin in thegame," the amount of losses insurers must cover before federal aidsteps in, up from the current $27.5 billion by $2 billion annually,until it reaches $37.5 billion in five years. Another change is toreduce the total amount the federal government will cover from thecurrent 85% to 80% over the same five-year period.

The sponsors of the bill are Democratic Sens. Charles Schumer,N.Y.; Jack Reed, R.I.; and Chris Murphy, Conn.; and RepublicanSens. Dean Heller, Nev.; Mark Kirk, Ill.; and Mike Johanns,Neb.

In reaction, Tom Santos, vice president of federal affairs forthe American Insurance Association, says, "We are very encouragedby the bipartisan leadership shown in the Senate. It is vital thatCongress act on TRIA as soon as possible.  We have someconcerns, but we look forward to working through the process."

Schumer, a member of the Senate leadership, explained theimportance of the bill by saying, "In a post-9-11 New York,terrorism risk insurance has proven to be an absolutely essentialpartnership between the government and the private sector that hasturned rebuilding downtown Manhattan from a question to acertainty."

He adds that "still more to be done" and this "crucialbipartisan plan" will reauthorize and extend TRIA before it expiresat year's end.

"Redevelopment and economic growth should be encouraged in NewYork and other high-risk areas across the country, even in the faceof unfathomable terrorist events, and I will work with mycolleagues to get TRIA passed this year to preserve this essentialtool," Schumer says.  

Rep. Maxine Waters, D-Calif., ranking minority member of theHouse Financial Services Committee, at the same time said in astatement that she lamented the lack of similar action in theHouse.

"I am encouraged by the news that leaders on the Senate BankingCommittee have reached agreement on legislation to extend thecritically important TRIA." She said she "applauded" the senatorsfor taking this important step to advance the conversation on TRIA,and added that, "This progress is even more important given theHouse Financial Services Committee chairman's refusal to bring anextension of the program forward thus far."