White House Warns Of TRIA Veto

WASHINGTON–The Bush administration threatened today to veto legislation extending the Terrorism Risk Insurance Act in the form expected to pass the House tomorrow unless it is drastically scaled back before it reaches the president's desk.

However, despite the categorical denunciation of all the provisions in the House bill it considers excessive, the administration in its “statement of position” for the first time explicitly stated it would accept some form of extension of the program beyond its current expiration date of Dec. 31.

“The administration is willing to work with Congress as the bill moves through the legislative process so that H.R. 2761 meets the critical elements of an acceptable extension,” the letter concluded.

This constitutes a change in position for the administration, which earlier had repeatedly insisted the program sunset in December.

The House bill, H.R. 2761, was before the House Rules Committee today so rules could be set for debating the bill tomorrow, as well as determining which proposed amendments to the existing text will be cleared for floor debate.

In advance of tomorrow's vote, the Property Casualty Insurers Association of America implored Congress to act promptly to extend the program promptly.

“TRIA is absolutely vital to our economy, and it needs to be renewed before its expiration date,” said Ben McKay, PCI's senior vice president, federal government relations. “After 9/11, there was a slowdown in commercial building because terrorism is an uninsurable risk. TRIA helped make terrorism insurance available and affordable. The program has worked, and it continues to work. It would hurt our economy if we allow this much-needed program to lapse.”

In its veto letter, the administration explained that TRIA was only intended to be a temporary mechanism to allow the market to adapt “in the short run” to the economic dislocations resulting from the attack on Sept. 11, 2001.

“Therefore, the administration opposes the legislation's 15-year extension,” the administration position paper said. “Instead, the program should be phased out in the near future.”

It said the House bill “unnecessarily” expands the program by including group life insurance and by adding domestic terrorism coverage.

“The insurance market for these risks has remained robust and competitive since TRIA's inception, even absent a federal backstop,” the letter said. “Adding these insurance coverages to the federal reinsurance backstop sends the wrong signal to the marketplace, which instead should be encouraged to find new ways to diversify the risks of doing business.”