The chairman of the House Financial Services Committee says hewants to provide certainty to the Terrorism Risk Insurance Act.

To that end, Rep. Jeb Hensarling, R-Texas, today proposed a"clean" seven-month extension of the current program, until Aug. 1,2015, in case Congress is unable to come to terms on longer-termreauthorization legislation. Hensarling says the clean extension,if necessary, would allow further debate on the future scope of theprogram without jeopardizing the marketplace.

But an industry official, who asked not to be named, says theclean extension offering is not a sign that Hensarling is willingto compromise on his House bill calling for a slimmed-down versionof TRIA as part of a five-year extension, but rather it is "athreat." That is, the official says Hensarling is betting he wouldhave a more conservative Congress to work with after the mid-termelections and "wait for a 'better' Congress rather than beingjammed by the Senate and industry."

The program's current reauthorization expires Dec. 31.

Hensarling unveiled his clean-extension proposal as he conveneda markup on H.R. 4871, the TRIA Reform Act of 2014, which is theHouse's extension bill that effectively phases out the programafter five years for all terrorism events other than those causedby nuclear, biological, radiological and chemical (NBCR)attacks.

Companion Senate legislation, S. 2244, the Terrorism RiskInsurance Program Reauthorization Act of 2014, would extend theprogram essentially in its current form for seven years, althoughit does contain some changes opposed by the industry such asincreases industry co-shares by one-third over a five-year phase-inperiod.

Hensarling's bet, if the industry official is right about hisintentions, may pay off. A new poll today by Democracy Corps, whichis headed by Democrats James Carville and Stanley Greenberg,appears to acknowledge that the best the Democrats—who now controlthe Senate—are likely to do is get an even split in the Senate,50-50.

Hensarling outlined his thinking on the TRIA issue: "I haveconcluded that today there remains a need for a federal backstopagainst heinous acts of terrorism that cannot be reasonablymodeled, reasonably mitigated, and whose catastrophic sizetruly impacts our economy."

But, he adds, "I also know there remains much capacity withinthe insurance and reinsurance industries to cover far greaterportions of this risk." 

At the markup, Rep. Maxine Waters, D-Calif., says H.R. 4817 "hascome a long way from initial drafts," but she joins lawmakers,policyholders and insurers in continuing to express seriousconcerns. "I'm disappointed that Republicans would not work with usto make changes that would have made this markup a bipartisanone."

Specifically, she says H.R. 4817 "punishes small, regional andniche insurers and contradicts one of the fundamental purposes ofTRIA—to make terrorism coverage mandatory and available."

The panel held a spirited debate on H.R 4817, itsversion of the TRIA reauthorization legislation, but postponed avote until 9:15 a.m. Friday. Besides voting on the Republicanversion of TRIA reauthorization, the committee will also vote on aDemocratic bill that calls for a straight, 10-year extension of thecurrent TRIA bill, as well as bills that would add creation of theNational Association of Registered Agents and Brokers (NARAB) toH.R. 4817.

The panel is expected to reject the Democraticalternative. It will also vote on two bills that would bar theFinancial Stability Oversight Council from designating any morefinancial institutions as systemically significant financialinstitutions (SIFI). One would impose a six month moratorium, andanother a one-year moratorium.

Nat Wienecke, senior vice president, federal governmentrelations, for the Property Casualty Insurers Association ofAmerica, says, "Today the Financial Services Committee met and hadan encouraging productive debate on TRIA reauthorization. We lookforward to the Committee reconvening tomorrow to vote on the TRIAreauthorization provisions pending before theCommittee. We are also very pleased that NARAB II wasadopted by the Committee and will be included in the House TRIAReform Act."