Legal problems facing Rep. Michael Grimm, R-N.Y., named sponsorof the preferred House version of legislation reauthorizing theTerrorism Risk Insurance Act (TRIA) are likely to have "zeroimpact" on House action on the legislation, according to severalinsurance lobbyists.

Grimm's indictment in Brooklyn comes at a sensitive time forTRIA. The Senate Banking Committee is likely to take up its versionof reauthorization legislation by mid-May. And key members of theHouse Financial Services Committee have asked the GovernmentAccountability Office to prepare by May 15 a report outliningoptions for renewal that would include a study on the costs andbenefits of the TRIA, along with the potential impact of scrappingthe law.

Rep. Randy Neugebauer, R-Texas, chairman of the FinancialServices panel's Housing and Insurance Subcommittee, one of therepresentatives who asked for the study, as well as Rep. JebHensarling,R-Texas, are demanding that industry "have more skin inthe game" in any renewal legislation. They want to put aconservative "stamp" on the program that could include legislationphasing out the program, or, eventually limiting it to eventscaused by nuclear, biological, chemical and radiation attacks.

At the same time, the consensus of industry lobbyists andcongressional staffers is that there is considerable sympathy forGrimm in Washington and an apparent willingness to allow him tohave his day in court.

That occurred even as Grimm Monday asked House Speaker JohnBoehner, R-Ohio, to "remove him" from the House Financial Committeeas he works through his problems.

Grimm was indicted Monday on 20 counts of fraud related tofederal charges of underreporting payroll while running an UpperEast Side restaurant. The probe started on allegations of illegalfund-raising. The indictment was unsealed in Federal District Courtin Brooklyn.

In his letter to the speaker, Grimm asked to be removed from thecommittee until the case is resolved. Boehner spokesman MichaelSteel confirmed the speaker's receipt of the letter.

"The Speaker believes Rep. Grimm's decision is appropriate underthe circumstances," he said.

Grimm is the primary sponsor of "the TRIA Reauthorization Act of2013," H.R. 508. It would extend the program for 5 years. AnotherHouse bill would extend it for 10 years, but that is seen asunrealistic.

As for the private reaction in Congress to Grimm's indictment,one lobbyist said he has talked to several colleagues, "and all areagreed that there is zero impact of this indictment on TRIA."

The lobbyist said "There also is a considerable amount ofgoodwill toward Grimm for his doggedness on that issue and otherslike flood insurance reform."

The lobbyist added that, "Nobody's happy to see this. This townis all too willing to throw Members in legal trouble under the bus.But Grimm's response of malicious prosecution rings true to many ofus, with a lot of things not adding up. 

"The politically expedient thing may be to try to force him outof office, but a lot of people in town think the guy deserves hisday in court," the lobbyist said.

Meanwhile, the next step on TRIA is seen as action in the SenateBanking Committee within the next few weeks on S. 2244, 

The current authorization runs out Dec. 31. The bill, with Sen.Charles Schumer, D-N.Y., the lead sponsor, would extend the programfor 7 years.

It would increase the amount of losses insurers must coverbefore federal aid steps in, from the current $27.5 billion by $2billion annually, until it reaches $37.5 billion in five years.Another change is to reduce the total amount the federal governmentwill cover from the current 85% to 80% over the same 5-yearperiod.

Specifically, under the current law, the first $27.5 billion ofinsured losses are either covered by insurers or recouped by thegovernment through a surcharge on commercial insurance policies.That would rise to $37.5 billion under the new bill, which waswritten by the staff of the Senate Banking panel.

There is opposition within the insurance industry to the Schumerbill, which has broad support amongst Schumer's colleagues. ButP&C industry officials are unhappy with the bill because itwould phase-in an increase in the deductible for insurers from acatastrophic attack by 33% for each insurer over time.

But, the increased "skin in the game" is believed necessary toget it through the much more conservative House.