TRIA Extension Won't Be Easy Congressmen Warn

The price the industry may have to pay for including nuclear and other risks in coverage may be beyond what some companies in the industry are willing to bear, one industry official with knowledge of the meetings said.

Rep. Richard Baker, R-Louisiana, who chairs the Capital Markets Subcommittee of the House Financial Services Committee, said today that adding such coverage, perhaps in exchange for an increase in the deductible paid by insurers before federal coverage kicks in, is an option. "There is no hard and fast rule" as to what Congress will consider when it examines extension of TRIA this year, Mr. Baker said.

He suggested that to include nuclear, chemical, biological and radiological risks as a package?"a higher level of retention in return for broader coverage"?is an option.

Asked for comment on Rep. Baker's remarks, David Winston, senior vice president for federal affairs of the National Association of Mutual Insurance Companies, cautioned that raising the retention rate beyond the current 15 per cent is "problematic."

Mr. Winston said that including the additional risks would constitute a meaningful improvement to the program, but cost is an issue.

Mr. Winston said that his members have already said that even with the current 15 percent retention level, or threshold for federal involvement, it is unlikely that any loss would be so high as to generate federal involvement.

However, both Rep. Baker and Rep. Mike Oxley, R-Ohio, the committee's chairman, appeared to be speaking in chorus when they said in separate venues on Capitol Hill that renewing the bill will not be easy.

Mr. Baker made his comments in an appearance at the annual Legislative Summit of the Council of Insurance Agents and Brokers. Mr. Oxley made his comments when he and other members of the House Republican leadership discussed their agenda and timetable with lobbyists.

Their remarks came amid signs that Sen. Richard Shelby, R-Ala., chairman of the Senate Finance Committee, will stick to his call for an early hearing on TRIA, perhaps by the March 3 date he mentioned several weeks ago. Aides to Sen. Shelby confirmed that is the date they are targeting.

Rep. Baker told members of the CIAB that some members of the House leadership are leery of extending TRIA because they don't want another unfunded federal liability, and that it will require some convincing that federal involvement is justified.

In his comments, Rep. Oxley said that TRIA needs to be reauthorized. He said he met with Treasury Secretary John Snow several weeks ago about the status of the federal study the agency is undertaking as to the viability of the program and whether it should be reauthorized. The mandate for the Treasury study calls for it to be completed in June, but it might be available sooner, Rep. Oxley said.

But, Mr. Oxley told the lobbyists, TRIA reauthorization will be a "heavy lift" no matter what the Treasury report says.

One lobbyist who attended the meeting said Mr. Oxley added that the leadership of President Bush "will be as critical to getting TRIA reauthorized as it was to getting TRIA passed in a lame duck session in 2002."

Mr. Oxley also told the lobbyists that he is "disappointed" that the reinsurance industry did not get back in the terrorism market post-Sept. 11 to the extent he had hoped it would.

And, in their separate comments, both Reps. Baker and Oxley said the committee would take up federal "standards" legislation for the insurance industry, though neither would commit to a timetable.