Under the U.S. Re Group proposal a Terrorism Risk Reinsurance Facility would be created "to establish a workable partnership between government and industry," Mr. Piccione said.

He disclosed that the company is approaching industry leaders and trade association executives with its proposal.

"We are finding a receptive attitude toward achieving an industry-government partnership," Mr. Piccione said. "Financing the coverage requires a government backstop because it is impossible to predict the frequency and severity of potential terrorism events," he explained.

The facility is designed to pay terrorism losses in excess of individual company retentions for all commercial lines up to a maximum industry loss of $45 billion in any year.

Under the proposal, industry retentions would be pegged at 15 percent of prior year commercial premiums, or about $30 billion. This would provide up to an estimated $75 billion of terrorism coverage per year.

Funding for TRRF would be provided by insurance companies through payment of a percentage of commercial lines premiums annually.

In the event that an act of terrorism occurs before the fund is capable of paying the losses, the federal government would lend the facility money to cover the shortfall until the fund builds up.

Mr. Piccione noted in the paper setting out the proposal that it is not mandatory for either policyholder or insurer to accept terrorism protection coverage, but it is mandatory for companies to offer such coverage.

A potential strong selling point for the U.S. Re Group proposal is that it is not mandatory for insurers to join the program. But, non-acceptance would result in no coverage for the insured, while the insurer who declines to contribute would get no protection from legislation designed to help those who suffered losses from a terrorism attack, including protection through a cap on losses.

Mr. Piccione said the proposal is being made public now because U.S. Re was asked last year by the Treasury Department to provide it with advice on an alternative format to the existing program in anticipation of its sunset provision, and has given permission for the company to release details of the work undertaken thus far to the American Insurance Association and other constituents in the industry, he explained.

"We met last week with senior executives of the AIA and plan to meet with other associations and industry leaders over the foreseeable future," Mr. Piccione said.