WASHINGTON–The Bush administration late yesterday effectively threw in the towel to its opposition to an extension of legislation providing federal support for insurers after catastrophic terror attacks.
Treasury Secretary Henry Paulson in a letter said the White House would support a seven-year extension of the Terrorism Risk Insurance Act program if the legislation developed by the Senate is approved by Congress intact. TRIA is set to expired Dec. 31.
When the bill came before the Senate Banking Committee today, the panel voted 20-1 to send it to the Senate floor. The only dissenter was Sen. Wayne Allard, R-Colo.
The administration's revised stance on the measure was outlined in a letter by Mr. Paulson to Sen. Chris Dodd, D-Conn., the Senate Banking Committee chairman, and Richard Shelby, R-Ala., the ranking minority member on the committee.
Asked to comment on the new administration position as the Banking Committee debated the bill, Dennis Kelly of the American Insurance Association said, "We commend the administration for recognizing the importance of reauthorizing the terrorism risk insurance program."
He added, "AIA and our member companies support Chairman Dodd and Senator Shelby's bill and encourage a strong, bipartisan vote in favor of the legislation when it is marked up in the Senate Banking Committee."
According to Joel Wood, senior vice president, government affairs for the Council of Insurance Agents and Brokers, which represents most of the brokers who sell the commercial policies involved in the TRIA program, "Senators Dodd and Shelby have achieved a major move forward on an issue that will protect the country from the financial risks of terrorism for years to come."
He added, "The bridge of their partisan divide is not only sensible, it is reassuring in a Congress where gridlock has too often prevailed.
"Likewise, the administration's support has come around and is consistent with Secretary Paulson's longtime support for a program that responsibly cures a market failure," he said.
Mr. Wood noted that several important distinctions between the House and Senate TRIA bills remain unreconciled, "but policyholders, brokers and insurers should view today's developments with significant relief and gratitude to Sen. Dodd and Sen. Shelby."
Mr. Paulson's letter said that, "should amendments be adopted, that would move the current bill farther from our key elements. The president's senior advisors would recommend that he veto the bill," the letter added.
Effectively, the biggest winners of the new Treasury position would be the smaller property-casualty insurers, who oppose language in the companion House bill that would require them to "make-available" insurance for coverage of nuclear, biological, chemical and radiation risks.
At the same time, another small insurer priority–a cut in the current trigger for federal support of $100 million in the event of a terrorist attack to $50 million–is not part of the current Senate bill.
The bill does not include group life insurance, which the life insurance industry had pushed for.
In seeking coverage for group life, the life insurance industry had argued that 47 percent of its risks involve group life coverage.
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