House, Senate Brace For

TRIA Showdown This Week

Bills have big differences; Bush backs Senate version

Overwhelming House passage of a bill substantially reshaping theTerrorism Risk Insurance Act sets the stage this week fornegotiations with the Senate on a compromise measure extending thefederal reinsurance program for at least two years.

The 371-49 vote on S. 467 sets up a conference between the Houseand Senate to reconcile vastly different bills. Congress wants toadjourn for the year by Dec. 17.

In a report to members, Ken Crerar, president of the Council ofInsurance Agents and Brokers, said he was "very pleased initialreports from the spokesman for Senate Banking Committee ChairmanRichard Shelby have been conciliatory in anticipation of aHouse-Senate conference, whereas there had been widespreadspeculation previously that [Sen.] Shelby would not budge from theSenate-passed bill that he negotiated with Sens. Chris Dodd andRobert Bennett, [R-Utah]."

Although Sen. Shelby, the Alabama Republican, is committed tohis version of the bill, his representative, Andrew Gray, said healso "has been pretty clear that we need to pass an extension thisyear." TRIA is set to expire on Dec. 31.

Sen. Dodd, D-Conn., primary sponsor of the Senate bill, saidTRIA extension "should be a top priority. Our nation can't affordto ignore the very real threat of future terrorist attacks.Extending TRIA will help provide important protections against therisk of terrorism to our economy and jobs."

Leigh Ann Pusey, the American Insurance Association's seniorvice president for government affairs, said "we appreciate that theHouse acted in a decisive and timely manner. We are confident thesame type of leadership will prevail in getting the House andSenate bills reconciled. Our nation's economic security depends onit."

"We are now on the cusp of keeping a much-needed terrorismbackstop in place," added Charles E. Symington Jr., senior vicepresident for government affairs and federal relations for theIndependent Insurance Agents and Brokers of America.

As expected, the Bush administration immediately issued astatement saying the White House "strongly opposes" the House bill,and by implication backs the more bare-bones Senate language. "Theadministration appreciates the House's efforts to craft legislationconsistent with the reform objectives," the White House said, "butthe House amendment to S. 467 in its current form does not meetthese goals."

The vote, with only staunch House conservatives in the negative,constituted a huge victory for Reps. Mike Oxley, R-Ohio, who chairsthe Financial Services Committee, and Richard Baker, R-La., chairof the key Capital Markets Subcommittee. In remarks on the Housefloor, Rep. Oxley said, "This is the only bill that provides for along-term solution." Without the House provisions, he added, "we'llbe back here in 12 months seeking another extension with noimprovement."

Rep. Barney Frank, D-Mass., ranking minority member of thecommittee, added: "Better late than never. I wish we had done thisearlier." He said he was "pleased with this bill in general,"noting that while there are differences between the House andSenate versions, in his opinion, "none…are of enormousdifficulty."

"I do not regard this as a favor to the insurance companies,"Rep. Frank said, adding that insurers don't have to providecoverage, or can provide it only at very high cost–especially inmajor cities. "The losers, if we don't enact this legislation, arethe people who want to build in these areas of the country," hesaid.

Mr. Crerar noted one key difference (for others, see theinfographic linked below). The Senate bill would create a"President's Working Group" that would make recommendations for anyadditional actions. "Because the Treasury Department released itsvery negative report on TRIA in June, it is highly unlikely thatsuch a working group would encourage any lasting federal role insecuring the terrorism marketplace," he said.

Flag: Take Your Pick

Head: What's The Difference?

House and Senate conference committee members will have theirwork cut out for them trying to reconcile two very differentversions of legislation saving the Terrorism Risk Insurance Actfrom expiration on Dec. 31. Among the key distinctions:

o Longevity: The Senate wants to terminate theTRIA reinsurance program in two years, while the House envisions alonger-term solution.

o Coverage: The House bill expands coverage,including group life, while the Senate looks to cut certainlines.

o Deductibles: The House bill would establish asilo approach, with different retention levels depending on theline, while the Senate sets a single retention level of 17.5percent for the first year, and 20 percent in the second year.

o Support: The White House backs the Senate'sbare-bones renewal and strongly objects to the House's moreambitious approach. It will be interesting to see how this playsout, as the House bill's champion–Rep. Mike Oxley, R-Ohio, chairmanof the Financial Services Committee–will chair the conferencecommittee.