Baker Introduces Narrow TRIA Extension Bill

A House Republican from Louisiana introduced a measure yesterday to extend the federal backstop for terrorism risk insurance.

Rep. Richard Baker, R-La., chairman of the capital markets subcommittee of the House Financial Services Committee, submitted a bill (H.R. 4314) calling for a 2-year extension of the Terrorism Risk Insurance Act.

A bill summary available on the Financial Services Committee Web site makes no mention of group life insurance.

According to the summary and press reports, the bill would:

o Increase the size of an event that would trigger TRIA protection to at least $100 million, from the current level of $5 million.

o Raise deductibles on all lines of insurance from their current level of 15%.

o Permit insurers to treat a portion of their terrorism premiums as "dedicated terrorism capital."

o Create a commission to draft "specific proposals" to establish a long-term pooling terrorism program.

o Allow the TRIA program to be renewed for a third year.

The current version of TRIA, which was enacted in December 2004, is set to expire Dec. 31.

H.R. 4314 is cosponsored by House Financial Services Committee Chairman Michael Oxley, R-Ohio.

Mr. Oxley said in a statement that Congress wants to wean insurers off of federal terrorism reinsurance subsidies.

So far, "industry has been slow to respond," he said.

The Bush administration has repeatedly emphasized that it would like to see Congress reduce the scope of the TRIA program. The administration has argued that group life insurers do not deserve to be added to TRIA because they seem to be doing well and have made too little use of commercial terrorism reinsurance.