TRIA: ?Soft Landing' Amendment To Be Proposed

TRIA: ?Soft Landing' Amendment To Be Proposed

By Arthur D. Postal, Washington Bureau Chief

NU Online News Service, Sept. 27, 4:25 p.m. EDT, Washington?The insurance industry is reacting with caution to plans by two House Democrats to offer an amendment to a measure extending the Terrorism Risk Insurance Act beyond the two years proposed in the bill, providing a so-called "soft-landing."[@@]

House Financial Services Committee members are due to consider extending the Terrorism Risk Insurance Act on Wednesday.

The industry's concern is that while they support the amendment, the committee leadership wants a "clean" bill that the full House, as well as the Senate and the White House, have agreed to support.

Weighing the minds of industry representatives is the fact that Congress hopes to recess by Oct. 15, and there is a huge backlog of legislation members want to deal with before leaving.

The amendment, to be offered by Reps. Steve Israel, D-N.Y., and Mike Capuano, D-Mass., is designed to ensure that the legislation will remain in effect until all one-year contracts for terrorism risk insurance signed in 2007 expire.

A spokesman for Rep. Capuano confirmed that he and Rep. Israel plan to introduce the amendment. Although no exact language for the amendment has been agreed upon, the staff official said it will state that contracts written in the middle of the final year of the TRIA extension, 2007, would be covered by the safety net until the contracts expire in 2008. "He just feels this is an orderly way to end the program, rather than have a hard cut-off date," the staff official said.

But the amendment will clearly state that no contracts entered into in 2008 will be covered by the program, the aide to Rep. Capuano said.

By contrast, the "committee print," the draft bill the committee will use in considering the legislation, as unveiled Friday by Reps. Mike Oxley, R-Ohio, and Richard Baker, R-La., chairman of the committee and its Capital Markets Subcommittee, respectively, calls for a so-called "hard-landing"?that is, the safety net for insurers will expire Dec. 31, 2007, leaving insurers on the hook for the remaining period during the following year that the contract remains in effect.

Julie Gackenbach, assistant vice president, federal affairs, in the Washington office of the Property Casualty Insurers Association of America, confirmed that the industry has been told by Rep. Oxley that the best chance to get the bill through expeditiously is for the committee to accept during its deliberations Wednesday the legislation drafted by the committee staff.

Key Democrats on the committee, including Rep. Barney Frank, Mass., and Paul Kanjorski, Pa., ranking minority members of the committee and the Capital Markets Subcommittee, respectively, have also signed on to the bill, industry lobbyists say.

Ms. Gackenbach confirmed that industry lobbyists were told by Reps. Oxley and Baker, as well as key committee staffers, that the bill needs to go forward without amendment in order for it to be moved through the Congress as "expeditiously as possible." In other words, "it needs to be as clean as possible," Ms. Gackenbach said.

Ms. Gackenbach confirmed that the industry is concerned House Majority Leader Tom DeLay, R-Texas, may move to oppose it if he perceives it is potentially too costly for the government.

Mr. DeLay is not voicing outright opposition, and she said that industry lobbyists are talking to Mr. DeLay in order to persuade him not to derail the bill. Ms. Gackenbach said that having the bill as drafted by the committee's leadership sail through the committee with strong bipartisan support will be sending the right message to Mr. DeLay.

As currently drafted, the bill to be considered Wednesday by the committee would extend TRIA until Dec. 31, 2007, and would add group life insurance to the safety net.

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 of the panel, 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 for 2007.

Support for the bill appears strong in the Senate, with most Democrats, who represent urban states most likely to be the target of a terrorist attack, supporting it. And, Ms. Gackenbach said, conservatives in the Senate from Western and rural states are indicating they will not oppose prompt action on the bill.

At the same time, officials of the group life insurance industry said they were "delighted" that Reps. Oxley and Baker had agreed to include group life insurance in the new bill. Ed Harper, senior vice president for public affairs and government relations for Assurant Inc., said the group life carriers ?expect harmonius action" when the bill is considered by the committee Wednesday.