NEW YORK–A draft of legislation to extend the federal backstop for insurance catastrophe losses should be ready by the end of next month, a lawmaker said today at a congressional hearing here.
Rep. Carolyn Maloney, D-N.Y., did not specify what terms would be included in the forthcoming measure when she spoke at a session of the key insurance subcommittee of the House Financial Services Committee.
The panel's session was held at the New York City Hall council chambers in Lower Manhattan.
A group of top real estate and insurance executives told the subcommittee ten years would be the minimum amount of time needed for any extension of the Terrorism Risk Insurance Act to have a positive impact on economic development.
Those same panelists, along with Sen. Charles Schumer, D-.N.Y., and New York Mayor Michael Bloomberg, said TRIA extension was vital to stabilizing an economic environment that could see building projects stalled by a lack of terrorism insurance.
Rep. Deborah Pryce, R-Ohio, the ranking member of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, said there was general agreement among Republicans on the subcommittee on the need to extend TRIA, but there was no consensus on what kind of terms should be enacted.
TRIA extension advocates also urged that domestic acts of terrorism be included in the extension bill along with group life coverage.
No panel member advocated elimination of the TRIA program, although two members, Rep. Scott Garrett, R-N.J, and Rep Ed Perlmutter, D-Colo., expressed the most skepticism about the wisdom of an indefinite extension.
"This was not intended to be a permanent fix," Mr. Garrett said. "We have talked about how we scaled back in the first extension, and now we should see how we can scale it back even further."
But most other hearing participants took just the opposite tack, urging development of a separate program for Nuclear Biological Chemical and Radiological exposure and a lowering of the minimum company loss threshold from $100 million to $50 million, and an extension of 10 years at a minimum.
Warren Heck, chief executive officer of the New York-based Greater New York Mutual Insurance Company, said halving the minimum would be a good incentive to get small and medium sized companies back into the terrorism insurance market.
Mr. Bloomberg said projects currently on the books that would create 46 million square feet of new commercial office space and produce an additional $10 billion in annual property tax revenue would never get off the ground without terrorism risk insurance.
"Although the current program does not expire until Dec. 31, the insurance industry writes and renews its commercial properties policies months in advance, meaning we need to reauthorize this vital legislation now," he said.
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