In what has become a similar pattern for the legislation, the Terrorist Risk Insurance Act (TRIA) was extended for a second time while facing a New Year's Eve deadline for authorization. The program essentially limits the amount of losses insurers would be responsible for in the event of a terrorist attack against the U.S.

Now referred to as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA), the federally backed program modifies previous legislation in several ways. While domestic terrorism acts were excluded from coverage in the past, U.S.-born attacks are now included in the criteria for determining an act of terrorism. The bill also keeps the insured-loss cap at $100 billion, and raises the program trigger to $100 million. Lastly, and perhaps most significantly, the legislation was extended for seven years, which is a departure from previous re-ups found in past extensions of 2003 and 2005, which were three years and two years, respectively.

One item that appeared in early versions of the bill but that didn't make it into the final legislation was the proposed mandate that nuclear, biological, chemical, or radiological (NBCR) attacks should also be covered. This stipulation was hotly contested by insurers and insurance associations throughout 2007, due to the fact that such attacks, though unprecedented, could have monumental impact on insurers and — according to industry groups — would be unjustified given that the TRIA program has always been deemed a temporary fix.

As a compromise, TRIPRA requires the Comptroller General to study the availability and affordability of insurance coverage for losses caused by terrorist attacks involving nuclear, biological, chemical, or radiological materials and issue a report not later than one year after the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007.

While insurers rejoiced, not all view the program as a positive. Some consumer advocates see the program as an unnecessary public funding of the insurance industry, one that ultimately puts taxpayers on the hook for risks that should be covered by insurers. Some also say that it allows insurers to unfairly shift risk. Critics point to record profits obtained in 2005, the same year Hurricane Katrina resulted in the single largest insured loss event in history, as proof that the program is unnecessary.

Special Reports /

TRIA Morphs, Returns for Seven Years

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