NAIC Urged To Formalize Support For TRIA Extension

"On January 1 of next year, people will be writing coverage for which the tail is no longer covered by TRIA, assuming there hasn't been an extension. The uncertainty will begin to be introduced with policies written January 1 of next year," Mr. Canter said.

He described the predicament the insurance world would face if the act is not extended as a high-wire act with the safety net pulled away.

"It would be like in a circus, where a high-wire act is going on, and then the ringmaster stops the proceedings and says now we are pulling the net away," he said. While that may be quite exciting to people watching the circus, "I would submit that it is not in the makeup of the insurance industry to react well to being a performer on the high wire when the net is pulled away."

"We think if that occurs, it will cause again tremendous uncertainty and dislocation," Mr. Canter told the regulators at the industry liaison committee. "We need the TRIA for stabilizing the marketplace. Marketplace by itself cannot fill the need in its entirety as quickly as the Act expires."

The issue facing the commissioners is that there are a declining number of legislative days left in Congress.

The Property Casualty Insurers Association of America in Des Plaines, Ill., noted that there will be a hearing on TRIA extension in April and that commissioners will need to take a formal position quickly.

"The circumstances that lead to TRIA have not changed in our opinion. There is nothing that I know of that has changed dramatically since the passage of TRIA that would suggest that TRIA is outdated or not needed," said Mike Koziol, assistant vice president of industry and regulatory affairs at PCI. "We think an extension is warranted, particularly for workers' compensation and commercial property."

The NAIC has a TRIA implementation working group, he pointed out, "but it's just that. Just the implementation–it's not a policy group."

The shape and the content of TRIA will continue to be debated, Mr. Koziol said, "but I hope no one will make the mistake of assuming that for whatever reason TRIA is no longer needed."

But while support was voiced for TRIA, Lawrence Mirel, insurance commissioner for Washington, D.C., and chairman at the NAIC industry liaison committee, said it was no perfect panacea.

He noted that insurers have been pulling out of Washington, D.C., rather than comply with TRIA. When people say TRIA stabilizes the marketplace, "maybe it's true for most of the country, but I can tell you it's not true for the District of Columbia, and it's not true for New York either," Mr. Mirel said.

TRIA is fine for people living in rural areas, but it poses a real problem for his jurisdiction, Mr. Mirel said. "TRIA does not address that and we are having a lot of problems with that. If we are going to talk about extending it, we should also talk about improving it as well."

Mr. Koziol from PCI also suggested some changes in TRIA?for one, there needs to be a clearer definition for the act of foreign terrorism, he said, because TRIA covers only foreign terrorism, and in cases involving anthrax, for example, "it's possible that no one could be sure whether they are domestic or foreign terrorist attacks."