Battle Begins To Extend Terrorism Backstop

However, as displayed when intense efforts failed to win passage of legislation extending the program in the waning days of the last Congress, "nothing is for certain," said Dennis Kelly, a staff official at the American Insurance Association.

The Senate billS. 467, introduced by Sens. Robert Bennett, R-Utah, and Chris Dodd, D-Conn.would establish a public/private partnership commission to take up the challenge of constructing a transitional terrorism backstop mechanism after TRIA ends, according to the AIA.

Charles Symington, senior vice president of federal government affairs at the Independent Insurance Agents & Brokers of America, a stong supporter of extension, said his group is "heartened by the significant bipartisan support, as evidenced by the original cosponsors of this legislation."

Likely to testify this week is the Coalition to Insure Against Terrorism, which represents most commercial policyholders. A primary supporter is the real estate industry.

"Certainly, we would like to see action as soon as possible, so that users of terrorism insurance can plan accordingly," said Clifton Rodgers, senior vice president and chief lobbyist at the Real Estate Roundtable. "Policyholders are already starting to see exclusions that will allow for terrorism insurance coverage only through Dec. 31."

However, quick action is not expected. For example, Sen. Richard Shelby, R-Ala., chair of the Senate Banking Committee, is likely to hold several hearings on the issue, lobbyists say.

Congress will also wait for the Treasury Department report on market conditions, mandated by June 30. Insurance and policyholder interests say nothing is likely to occur until that report is issued, although some sources say Treasury could release its report before the due date.

Another issue is when the House Financial Services Committee will show its hand on the issue, with members of the committee introducing legislation and its leadership scheduling a hearing.

Equally important, all of the principalsincluding members of Congress and administration officials as well as insurers and policyholdersagree that lack of coverage for chemical, biological, radiation and nuclear risks constitutes a huge gap in the program.

Another issue is that some large insurers are questioning whether the current structure of the TRIA program is appropriate.

Meanwhile, the case for TRIA extension received a boost from recent comments by Mr. Greenspan that a reinsurance market for terrorism coverage has yet to be created.

Responding to questions from Rep. Sue Kelly, R-N.Y., who heads a subcommittee of the House Financial Services Committee, and who has voiced strong support for TRIA renewal, Mr. Greenspan said he has "yet to be convinced" a private market for terrorism insurance can be made to work. "There are instances in which markets do not or cannot work, andI have not been persuaded that this market works terribly well," he said.

AIAs Mr. Kelly said the industry is "urgently calling for an extensionWe just cant get to Dec. 31 and see a cliff."

Reproduced from National Underwriter Edition, February 25, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.