That sigh of relief you might have heard over the holidays coming from Washington was the sound of insurance industry lobbyists grateful that President George W. Bush had finally signed a bill extending the Terrorism Risk Insurance Act for two more years, just about a week before the controversial program was due to expire on Dec. 31. The question now is what to do about terrorism reinsurance beyond 2007.
Extension was no slam dunk for the industry, confronted with critics accusing insurers of seeking a “bailout,” a White House determined to downsize the government's exposure, as well as a Congress widely split on whether to simply renew the structural status quo or completely reinvent the federal reinsurance backstop.
In the end, the minimalists on the Senate side won out over those in the House seeking a more ambitious rethinking of the TRIA system, leaving the long-term future of federal involvement in the terrorism insurance market very much in doubt.
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