Just a few months ago, the Terrorism Risk Insurance Act (TRIA), an Act that limits the amount of losses insurers would be responsible for in the event of a terrorist attack, seemed like a sure bet to be extended for a third time. Though both the House and the Senate had competing bills with significant differences, for the most part, both agreed that the program should be extended further into the future than in the past, in which it was given just a two-year re-up. But with the Dec. 31, 07 expiration date looming and new promises of a presidential veto, the fate of TRIA is suddenly looking grim.

There are several important differences between the House and the Senate bills. While the House asks for a 15-year extension of TRIA, the Senate requests just seven. Furthermore, the House bill mandates that coverage be made available by insurers to cover nuclear, biological, chemical, or radiological attacks, a point the Senate has yet to adopt in its version. Both bills, however, propose eliminating the domestic terrorism exclusion, thereby classifying all attacks -- domestic or international -- under the terrorism banner.

A similar pattern occurred in Dec. 2005, the last time TRIA was extended. A year-long debate ended with last-minute negotiating, and the resulting stripped-down bill was given approval for another two years shortly before the Dec. 31, 2005 deadline.

Although critics say TRIA provides an unnecessary subsidy to insurers, Risk Management Solutions says that TRIA provides the insurance industry with solvency. The group said growth and availability of terrorism coverage will only continue with assurance that the Federal government will support this process in the medium-term by guaranteeing TRIA for a number of years. Without this backstop, policyholders may be left without coverage in the face of devastating losses.

However, a White House statement released this week disagreed. It promised to veto the House bill if it was approved instead of slimmer, less inclusive Senate version.

"The Administration believes that the Terrorism Risk Insurance Act (TRIA) should be phased out in favor of a private market for terrorism insurance. The most efficient, lowest-cost, and most innovative methods of providing terrorism risk insurance will come from the private sector. Therefore, the Administration has set forth three key elements for an acceptable extension of TRIA: (1) the Program should be temporary and short-term; (2) there should be no expansion of the Program; and (3) private sector retentions should be increased. The Administration continues to believe that any TRIA reauthorization should satisfy these three key elements. However, the Administration will not oppose the version of H.R. 2761 passed by the Senate on Nov. 16, 2007. The Administration strongly opposes any amendments that move the Senate-passed version of the bill away from the Administration's key elements. Accordingly, if H.R. 2761 were presented to the President in the form to be considered by the House, his senior advisors would recommend that he veto the bill."

Unless a compromise is reached between the Senate and the House, it appears TRIA could be in trouble.

Interested in more terrorism news and in-depth articles? Head over to Claims' terrorism channel for more information.

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