Congress' recent extension of the Terrorism Risk Insurance Act is largely viewed as a temporary solution, according to a forum held by GE Insurance Solutions' Insurance Leadership Institute.

TRIA, designed as a federal backstop for the insurance industry in the event of a foreign terrorist attack, was extended by Congress in December 2005 until the end of 2007. The insurance industry sees terrorism as an unquantifiable, unpredictable risk; therefore, setting a proper premium price to compensate for its exposures is near impossible.

Among the concerns voiced in the forum were thinning government efforts to provide a federal financial backstop, increased deductibles, excluded areas of business, and potential solvency issues. Joanne McMahon, GE Insurance Solutions' assistant general counsel for Government Relations said these concerns are prompting groups to try to conceive workable long-term solutions, preferably before the 2007 deadline. The goal is to avoid being forced to return to Congress for more assistance at the end of 2007, she said. Another aim is to avoid a repeat of 2005's last-minute negotiations before TRIA's scheduled expiration.

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