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WASHINGTON–Efforts to pass legislation extending the federal backstop for insurers' losses after major terrorist attacks will not be hampered by language in a recently introduced house bill, insurance industry representatives said.

The bill includes a provision that would effectively reset the deductible amount of coverage and threshold for federal involvement for an area hit with a terrorism attack.

During House Financial Services Subcommittee markup discussions Tuesday, Rep. Richard Baker, R-La., offered an amendment resetting the program for the entire country to the levels outlined in the original TRIA bill. Member s of the panel approved the amendment, but with the proviso that further work would be done to set a different threshold to apply equally across the country.

“The reset makes sense,” said Ben McKay senior vice president, federal government relations for the Property Casualty Insurers Association of America (PCI).

He said it would permit maximum private sector involvement by allowing all insurers to participate in the market, maximizing competition and lowering prices.

“We think the trigger should remain as low as possible and hope the Congress will continue to fight for an even playing field for small insurers.”

An industry source who asked not to be identified said that the Baker amendment would likely not damage the legislation's chances of passage, noting that a majority in the committee voted for the bill after the amendment was added.

Although the source declined to speculate what the eventual threshold would be for federal involvement, they added that “regardless of what it ends up being, it will be lower than what is in the current law.”

Another provision that will be worked on further is a proposed requirement that insurers offer coverage for nuclear, biological chemical and radiological attacks.

The current bill delays the requirement for small insurers until 2009. Rep. Donald Manzullo, R-Ill, offered an amendment that would have allowed state insurance commissioners to exempt small companies from the requirement, but agreed to withdraw it after Democrats agreed to work towards a better solution for the issue in advance of the full Financial Services committee markup expected next week.

The National Association of Mutual Insurance Companies, which has focused on issues for smaller companies, said it is “encouraged” by the progress made with the bill.

“By delaying the implementation of the requirement for companies that offer terrorism insurance to make available coverage for nuclear, biological, chemical and radiological attacks and phasing in lower deductibles for that coverage, the subcommittee members have demonstrated a willingness to work to address the complexities of the NBCR issue, said Carl Parks senior vice president of government affairs for NAMIC.

The legislation would also extend the terrorism risk insurance program for ten years and add coverage for group life and domestic acts of terrorism.

“Congress is one step closer to a program with the duration, stability and certainty needed in the market so insurers can make the investment necessary for continued growth and development in our country's financial structures and institutions,” said Leigh Ann Pusey, chief operating officer and senior vice president for government affairs for the American Insurance Association after the subcommittee approved the bill by a 24-19 vote.