House Passes Its Version Of TRIA

"We are now on the cusp of keeping a much-needed terrorism backstop in place," said Charles E. Symington Jr., senior vice president for government affairs and federal relations for the Independent Insurance Agents and Brokers of America.

Mr. Symington said his group is "very confident that an extension can make it through conference and to the President's desk before the end of the year, and we will do everything we can to help accomplish this goal."

But, as expected, the Bush administration immediately issued a statement saying it "strongly opposes" the House bill and by implication supports the more bare-bones language in the Senate measure.

"The Administration appreciates the House's efforts to craft legislation consistent with the reform objectives," the White House said in a statement of administration policy, "but the House amendment to S. 467 in its current form does not meet these goals."

The vote, with only staunch House conservatives in the negative, constituted a huge victory for Reps. Mike Oxley, R-Ohio, chairman of the Financial Services Committee, and Richard Baker, R-La., chairman of the key Capital Markets Subcommittee.

In remarks on the House floor, Mr. Oxley said, "This is the only bill that provides for a long-term solution."

Without these provisions, he added, "we'll be back here in 12 months seeking another extension with no improvement."

Rep. Barney Frank, D-Mass., ranking minority member of the committee, added: "Better late than never. I wish we had done this earlier."

Mr. Frank added that he was "pleased with this bill in general," but noted that there are differences between the House bill and Senate bill, although in his opinion, "none that are of enormous difficulty."

"I do not regard this as a favor to the insurance companies," Mr. Frank said. He explained that insurers do not have to provide coverage, or can provide it only at very high cost, especially in major cities.

"The losers, if we don't enact this legislation, are the people who want to build in these areas of the country," said Mr. Frank.

The House bill calls for different retention levels of loss for industry based on lines of business before federal supports kick in.

Specifically, workers' compensation would have a 16 percent level the first year of renewal and 18 percent in the second year; property 20 percent in the first year and 22.5 percent in the second year; group life 21.5 percent in the first year and 24 percent in the second year; casualty, 25 percent in the first year and 30 percent in the second year; and NBCR (nuclear, biological, chemical and radiation) 7.5 percent in the first year and 8.25 percent the second year for workers' compensation, group life and property and casualty.

The Senate bill is much narrower. While the House bill expands the lines of coverage, and adds group life, the Senate bill diminishes TRIA coverage.

The coverage areas removed from the Senate bill include commercial auto, professional liability, surety, burglary and theft, and farm owners' multi-peril.

David Winston, senior vice president – federal affairs, for the National Association of Mutual Insurance Companies, said, "The House's action today is a major step to making TRIA reauthorization a reality prior to Congressional adjournment.

"NAMIC looks forward to the House-Senate conference developing a consensus bill and getting it approved in both Houses and to the President's desk this month. So many critical economic decisions depend on the availability of terrorism coverage, making the TRIA extension imperative to avoid marketplace instability," said Mr. Winston.

Opposition to TRIA continued from the Consumer Federation of America. "It is unbelievable that the House would vote to expand TRIA when insurance profits are skyrocketing, commercial insurance rates are sinking and beleaguered taxpayers still face growing budget deficits," said J. Robert Hunter, CFA insurance director and former Texas insurance commissioner and federal insurance administrator.

"It is time to wean insurers and large real estate interests from this lucrative government program, not give them a bigger handout," he said.