House, Senate Committees Vote For TRIA Extension

A number of industry lobbyists, including Charles E. Symington Jr., senior vice president for government affairs and federal relations at the Independent Insurance Agents and Brokers of America, said that because the bills are different, action on a consensus bill likely will take place the week of Dec. 5, when Congress returns from its recess.

In a message to members late Wednesday night, Ken Crerar, president of the Council of Insurance Agents and Brokers, said of TRIA: "Congress is expected to return after the Thanksgiving holidays to complete action on a number of legislative items, and we believe that this issue is of significantly high profile to create resolve among Senate and House leaders for resolution."

In a statement after the Senate vote, Treasury Secretary John Snow praised the Senate version of the bill. He said that "Treasury set out principles this summer to ensure that the risk to taxpayers was reduced in any extension of the Act. I support the legislation passed by the Senate Banking Committee today as it meets many of those important goals."

Mr. Snow continued that as Congress proceeds with legislation to extend TRIA, "we will continue to work with both the House and Senate to ensure the program entails greater participation of the private market and less risk for taxpayers."

Late Tuesday, after the House bill, introduced by Rep. Richard Baker, R-La., chairman of the Capital Markets Subcommittee of the Financial Services panel, became public, Brookly McLaughlin, a Treasury spokesperson, voiced concerns about some provisions of the House version. She noted that parts of the legislation would expand the program and increase taxpayers' risk.

"As introduced, the bill increases lines of coverage, increases complexity and puts taxpayers at risk in certain cases sooner than under the current version," Ms. McLaughlin said. "We've been very clear that any extension must result in private market participants taking on a larger role in providing terrorism coverage and the risk to taxpayers being decreased."

The Senate Banking Committee reported a more modest version of the current legislation by a unanimous voice Wednesday morning. Later that afternoon the House Financial Services Committee approved a more expansive and innovative version of extension legislation by a vote of 64-3.

Although there was little debate on the measure itself by the House panel, and passage by the committee was never in doubt, several members of the panel said they would have preferred a bill more in line with White House recommendations for reducing the federal government's exposure and increasing the burden on private insurance companies.

"While I support extending TRIA, I don't support expanding the exposure of the taxpayers," said Rep. Tom Feeney, R-Fla., adding that he had seen the Senate version of the bill and liked it.

Rep. Jeb Hensarling, R-Tex., also saw the Senate bill as preferable. He added that he was "very hesitant, very reluctant to see the federal government, again, permanently get into the insurance business" through a long-term terrorism risk backstop. Rep. Hensarling also said that group life, which is included in the House version of the bill but not the Senate's, "seems to be widely available" and that "the government's exposure will only be greater with the silo approach."

Additionally, Rep. Hensarling said that the $50 million threshold for federal government involvement "seems to be on the fairly low side."

Although he said he would support the bill, Rep. Hensarling said he "hoped the final result appears more like the product on the other side," referring to the Senate legislation.

Rep. Edward Royce, R-Calif., also noted that rather than following the White House track of shrinking the size and scope of the TRIA program, "this bill expands the scope of the program and raises government exposure." Additionally, Rep. Royce said the bill would provide a benefit for insurers and real estate developers.

Despite these criticisms, the legislation is not a Democratic project, or a giveaway for the insurance industry, according to Rep. Barney Frank, D-Mass., ranking member of the committee. "This is not the bill the Democrats would have written if we were in the majority," he said.

Rep. Frank also noted that the bill should not be seen as the government shouldering a burden that rightfully belongs to the insurance industry. "I do not regard TRIA as a favor to the insurance companies," he said, adding that it is instead "a favor to the insured."

Many construction projects could not move forward without TRIA, he said, and trying to deal with the largely unpredictable risk of terrorism should not be something that policyholders should face themselves.

Many Republicans also favored the bill and called for the eventual House conferees to press for their bill's provisions when the legislation goes to conference.

Rep. Baker said, "The legislation I have authored maintains an affordable terrorism insurance marketplace for consumers, while significantly increasing taxpayer protections and efficiencies."

Rep. Baker said the House bill will add market reforms to the program to streamline the regulation of terrorism insurance and create a public-private commission to draft specific proposals to establish a long-term pooling terrorism program. Based on the success of the commission's recommendation, the program could be extended for a third year as a transition."

Rep. Mike Oxley, R-Ohio, chairman of the committee, said extension of TRIA "is a necessary next step that will encourage the growth of private sector capacity, provide for greater taxpayer protections, and reduce the role of the Federal subsidy over time. Industry has been slow to respond, so Congress must uphold its duty to the taxpayers by making this program pay for itself."

Rep. Sue Kelly, R-N.Y., noted that the "line between domestic and international terrorism" is growing increasingly blurry, and she called for the distinction to be dropped from the final bill, as it has been in the house version. Additionally, Rep. Kelly "strongly" called for group life to be included when conferring with the Senate.

Supporting the TRIA extension, Sen. Richard C. Shelby, R-Ala., said he was "pleased that my colleagues and I have been able to reach a compromise on extending the TRIA program. I believe that it strikes the appropriate balance between the needs of the industry and efforts to foster greater private market solutions." Mr. Shelby was a reluctant supporter of the bill; in fact, he voted against the original bill in November 2002.

He added, "I very much appreciate the leadership of my colleagues, especially Senators Chris Dodd, D-Conn., and Robert Bennett, R-Utah, and Ranking Member Paul Sarbanes, D-Md."

Sen. Dodd said that, "This is a common-sense proposal. It reaffirms that we need to continue to remain vigilant in protecting our country's economic foundation from any possible future terrorist attack or threat."