A key test of congressional support for a provision in a billextending the federal terrorism reinsurance program that wouldprovide a trigger and deductible break for those insuring areaspreviously hit by a terrorist attack--such as New York--will takeplace on July 24.

That's when the Capital Markets Subcommittee of the HouseFinancial Services Committee holds the first markup of H.R. 2761,the Terrorism Risk Insurance and Extension Act of 2007.

Rep. Gary Ackerman, D-N.Y., said he and Rep. Barney Frank,D-Mass., are lobbying strongly for a "reset" provision that wouldmake it easier for insurers to underwrite terrorism coverage inareas hit by a previous attack--and charge lower rates than theywould otherwise. It would have the same effect in the event of afuture attack in other high-risk areas.

It does so by mandating that insurers get federal help sooner inthe event of a subsequent attack through lower deductibles andtriggers than those imposed in areas that have not been hit. Suchwould be the case for any "previously impacted area" designated bythe Treasury.

Specifically, under the provision, insurer deductibles would bereduced by one percent for each $1 billion in aggregate industrylosses resulting from an act of terrorism within the previouslyimpacted area, except that deductibles cannot be reduced below 5percent.

Similarly, the program trigger would be reduced by $10 millionfor each $1 billion in aggregate industry losses from an act ofterrorism in such areas--except that the trigger cannot be reducedbelow $5 million.

TRIA extension has strong support in Congress, but H.R. 2761could face problems because the reset provision, the length of theextension and other points are regarded in some quarters asrepresenting a too expansive increase in the present program, whichexpires Dec. 31.

Even before the reset provision was raised, the bill drew strongsupport within the insurance industry, because thelegislation--drafted by Rep. Frank and Mike Capuano,D-Mass.--contains provisions they have been unable to get in thetwo prior versions of the program, including coverage for nuclear,chemical, biological and radiation attacks.

Reps. Frank and Capuano also resisted pressure from smallinsurers to drop a provision mandating that all insurers "makeavailable" coverage for NCBR risks.

The bill in general is expected to win overwhelming support fromthe committee. The current plan is for the subcommittee to reportout the bill on July 24, and for the full committee to act on itAug. 1. House floor action is expected soon after the House returnsin early September.

That will provide perhaps three months for the Senate to act andfor the two chambers to resolve differences in the bill. Support isnot as strong in the more conservative Senate, and the White Housedoes not back long-term extension.

Rep. Ackerman does not believe the reset provision should stallthe bill's advance.

"I think everybody should support it," he said in an interview."It goes to the issue of whether we accept the terrorists' viewabout what we can and cannot rebuild if they blow something up."Otherwise, he said, the terrorists "would be using the economictools of America to deny us our choice of rebuilding where theyblow things up."

Rep. Ackerman said that despite conservative opposition, "thereare some Republicans who understand the patriotic necessity forgetting this done." He said he thinks "we have the votes in thesubcommittee to get this through. We are working very hard at it.Rep. Frank will be working on this, as will I."

Concern about the provision first arose at a June 18 hearing onthe new bill, when Rep. Paul Kanjorski, D-Pa.., chairman of thesubcommittee, said that "by altering the equity of the currentprogram, this provision as currently constructed has the potentialto undermine the broad national support that TRIA enjoys."

He noted that a provision in legislation passed by the Housealso dealt with the issue, but that provision dealt with it"nationally and prospectively."

"The reset provision in this bill is retroactive, regional andmuch more generous than what we adopted in 2005," Rep. Kanjorskisaid. "We should work to modify it in the weeks ahead."