A Quick Move On TRIA Bill Urged

WASHINGTON--The president of the American Insurance Association plans to urge Congress Thursday "to act as quickly as possible" on legislation extending the Terrorism Risk Act so that the new program is in place as insurers and their policyholders go through the upcoming renewal season.

In remarks scheduled to be delivered at a hearing on H.R. 2671, "the Terrorism Risk Insurance Revision and Extension Act of 2007, Gov. Marc Racicot also asked that the current retention and co-share levels for insurance losses be maintained in any legislation extending TRIA.

The hearing on, "Examining a Legislative Solution to Extend and Revise the Terrorism Risk Insurance Act," will be held before the Committee's Capital Markets Subcommittee.

Others expected to testify include David Nason, assistant secretary of the Treasury for financial institutions, and Eric Dinallo, New York state insurance superintendent.

Other witnesses will include Sharon Emek, partner, CBS Coverage Group, on behalf of the Independent Insurance Agents and Brokers of America; Warren Heck, chairman and CEO of Greater New York Mutual Insurance Company, representing the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America; Christopher Nasseta, president and CEO of Host Hotel and Resorts, on behalf of the National Association of Real Estate Investment Trusts.

Also expected to testify are Frank Nutter, president of the Reinsurance Association of America; Jill Dalton, Jill Dalton, a managing director at Marsh, Inc., a subsidiary of the Marsh & McLennan Companies, Inc., and leader of Marsh's terrorism specialty practice, on behalf of the Council of Insurance Agents and Brokers; and Dennis Smith, incoming president of the American Association of State Compensation Insurance Funds.

The bill as introduced Monday by Rep. Barney Frank, chairman of the House Financial Services Committee, and Rep. Mike Capuano, both D-Mass., calls for maintaining the current retention and co-share levels.

In asking that Congress resist efforts to raise the current co-pays, Mr. Racicot said that, "While the resulting exposure from conventional terrorism poses a significant operational and risk management challenge for many insurers, "the market as a whole has adapted.

"We urge you to hold firm against any further increases that might be advanced in the name of reducing the federal role," Mr. Racicot is expected to say. "We believe that such a rationale for rising insurer retentions and co-shares is based on economic theories about capacity that ignore practical market reality."

Mr. Racicot also voiced support for provisions in the bill adding support for the risk of nuclear, chemical, biological and radiological attacks, and reducing the co-pays and retention for these events, as well as the decision to extend the program for 10 years.

"I also would like to commend the sponsors of the legislation for incorporating domestic terrorism acts into the program," Mr. Racicot said. "Experience has shown that the distinction between foreign and domestic terrorism is artificial."

He noted that post-TRIA events such as the London Underground bombing and the thwarted attack on John F. Kennedy Airport have "reinforced the practical difficulty of making this distinction and have underscored that it is meaningless from an economic perspective, and impractical from an insurance perspective."

Mr. Racicot said that extending the program for 10 years, "while maintaining a stable program structure, will bring much needed certainty to all of the participants in the market, as well as regulators, rating agencies, and financial analysts. This is critical for long-term investment, economic development, and growth."