Ground Swell For A TRIA Extender Now

Ground Swell For A TRIA Extender Now

By Arthur D. Postal and Matt Brady Washington Bureau

NU Online News Service, Sept. 23, 4:10 p.m. EDT, Washington?Momentum continues to grow in Congress for passage this year of legislation extending for two years the Terrorism Risk Insurance Act.[@@]

Action on such legislation is scheduled Wednesday before the full House Financial Services Committee, and broad bipartisan support is expected. The plan is then to move the bill through the House within the subsequent 10 days, according to Julie Gackenbach, assistant vice president, government relations, for the Property Casualty Insurers Association of America.

Rep. Mike Oxley, R-Ohio, chairman of the panel, has indicated that enactment of the bill has become a priority.

"Rep. Oxley, by moving this quickly through the normal committee process and on to the floor, is retaining all of his legislation options for moving the bill this year," Ms. Gackenbach said.

Equally important, strong support for the legislation was evident for the bill during the Senate Banking Committee hearing on insurance regulation yesterday. All senators except chairman Sen. Richard Shelby, R-Ala., voiced support for the bill; Sen. Shelby had indicated earlier in the week that he wanted to hold off action until next year because he wanted to hold a hearing on the issue.

Now it appears that the chairman will go along with passage this year after members of the panel gave a near-unanimous show of hands, when they were asked by Sen. Charles Schumer, D-N.Y., to indicate their support for the bill.

Only J. Robert Hunter, insurance director of the Consumer Federation of America, raised his hand when Sen. Schumer asked during the hearing who opposed extending TRIA.

"Senators get it that this needs to be done and it needs to be done expeditiously," Ms. Gackenbach said. "Our preference is to move this bill as soon as possible. We're moving into some pretty significant dates for people seeking to negotiate new contracts. So the earlier we can complete this action, the better it is for policyholders and insurers."

The bill to be taken up by the House committee was introduced in July by Reps. Richard Baker, R-La., chairman of the Capital Markets Subcommittee, and Pete Sessions, R-Texas. It would extend the current TRIA legislation for two years, retaining the 15 percent individual company retention level scheduled to go into effect Jan. 1, 2005 through 2006, and increase that to 20 percent in 2007.

Similar legislation has been introduced in the Senate by Sens. Robert Bennett, R-Utah, and Chris Dodd. The only concern with the bill is that it provides "no soft landing," and there will be a hard cutoff date of Dec. 31, 2007.

The hard cutoff means insurers extending contracts during 2007 would retain responsibility for paying claims during the period in 2008 until the contracts expire even though the federal backstop would no longer be available?the same problem the industry is concerned with now. "It doesn't solve that problem," Ms. Gackenbach said.