WHAT IS the proper role of government in insuring disasters--both natural and man-made? That has been one of 2005's great debates in the insurance business. This year's unprecedented hurricane season has renewed calls for a federal backstop for hurricanes and earthquakes, while the approaching expiration of the Terrorism Risk Insurance Act of 2002 has forced Congress to decide to what degree the government should continue to be an insurer of events like 9/11.

Let's consider TRIA first, which was set to expire on Dec. 31. It is my fervent hope that by the time you read this, TRIA will have been extended. Certainly, at the time this was written, the signs were propitious. Both the House and the Senate had approved legislation to renew the program and were expected to meet to iron out differences in the two bills earlier this month. Meanwhile, the White House, despite taking a hard line throughout the year, was said to be interested in reaching a deal that would be popular with business constituents.

The House and Senate bills gave different answers to the question I posed in the first paragraph, with the former more generous to insurers than the latter. Currently under TRIA, coverage is triggered upon the certification of an act of terrorism causing $5 million or more in losses. Insurers pay a deductible equal to 15% of their direct earned premiums from last year. Then the government assumes 90% of covered losses up to the program's $100 billion cap. Coverage applies to commercial insurance and workers comp.