The property-casualty insurance industry will focus on retainingas much of the current Terrorism Risk Insurance Act as it can thisCongressional term.

Congress, scheduled to return from recess next week, convenedfor a special session to deal with legislation appropriatingemergency funds for Hurricane Katrina relief.

Even though dealing with the aftermath of Hurricane Katrina isseen as changing the Congressional agenda substantively, theindustry has decided to keep an eye on the narrow goal of extendingTRIA because the current law expires Dec. 31, industry officialssaid.

Ernst Csiszar, president and chief executive officer of theProperty Casualty Insurers Association of America, said that theaftermath of Katrina clearly shows, "We need an overall discussionof all issues related to terrorism, hurricanes, major earthquakesand major fires." Hurricane Katrina, he continued, "just points tothe fact that we need to be prepared for these in advance."

He added that "right now, TRIA is TRIA. It is set to expire Dec.31. That's a real deadline. Let's get TRIA renewed in someform."

Mr. Csiszar said a discussion on the need for an integratedapproach to major catastrophe must take place over the next 18months. Hurricane Katrina, he noted, pointed out that "there is apatchwork of coverages. I can't think of any major area in the U.Sthat doesn't have exposure to a potential catastrophe. That is whya more integrated approach is required."

Likely to fall by the wayside because of the preoccupation withextending TRIA is any action on regulatory reform, industryofficials say privately. Specifically, even an introduction of theState Modernization and Regulatory Transparency Act (SMART), beingdrafted by the staff of the House Financial Services Committee, isunlikely this year.

According to one industry lobbyist, "SMART's dead for the year."He added, "Maybe we get a hearing, maybe a bill introduction, butthat's it." Moreover, he added, "I think the [life Optional FederalCharter] coalition has been hitting a brick wall on finding qualitysponsors in the Senate beyond that of Sen. John Sununu, [R-N.H.],"the lobbyist said.

The industry has decided to focus on renewing TRIA because ofintense pressure from conservatives to shut it down. This issupported by the White House, according to sources, though theTreasury Department report calls for narrow legislation aimed atgetting the federal government out of the terrorism reinsurancebusiness completely within two years.

Draft legislation on a TRIA extension shown to lobbyists by theRepublican staff of the House Financial Services Committee has alsobrought industry attention.

The primary House proposal calls for extension of the currentprogram over two years with far higher deductibles, retentionlevels and even triggers. That approach will call for thegovernment to end its backstop after the new program expires Dec.31, 2007.

The proposal calls for adding group life and deleting someproperty-casualty coverages, such as commercial auto and generalliability.

David Winston, top Washington lobbyist for the NationalAssociation of Mutual Insurance Companies said that "getting TRIAextended beyond its expiration at the end of this year is theindustry's top legislative priority."

Alluding to industry disappointment with draft legislationcoming out of the House Financial Services Committee, Mr. Winstonsaid NAMIC "would be supportive of a short-term extension thatcontains some reasonable modifications to the existing program todecrease government involvement and taxpayer exposure."

At the same time, Democrats clearly stated in late July thatthey would not support extending TRIA in an "emasculated form" fora short period. One spokesman for a top Democrat said last Thursdaythis policy remains for Democrats on the committee.

Asked if Hurricane Katrina changed the equation for members ofthe Senate Banking Committee, a spokesman for Sen. Richard Shelby,R-Ala., said "Sen. Shelby's perspective is that any extension ofTRIA should be narrow, targeted and minimize interference with ourmarkets."

He added that, "We are focused specifically on TRIA."

Julie Rochman, a spokesman for the American InsuranceAssociation, said renewal of TRIA is the AIA's "top priority" forthe current session of Congress, and that it "anticipates quickaction," noting that Senate Majority leader Bill Frist, R-Tenn.,"recently said he supported quick action."

Ms. Rochman cautioned, "I don't think people should assume therewill be drastic cuts in the scope of the program." She explainedthat there are "perfectly good reasons the lines in the program arein there to begin with."

She said the AIA's concern is that if lines that are currentlyin TRIA are removed from the program, such as commercial auto andcommercial general liability, "that will be a very bad publicpolicy decision." She explained that "commercial auto contributes alot in terms of premium dollars, but not a lot of risk." Removingthe line does not similarly reduce the aggregate dollar amountinsurers are on the hook for, she said.