House In Last-Ditch Effort To Pass Bill Expanding TRIA Program Extension

House Democrats last week passed legislation expanding the Senate version of a bill extending the federal terrorism reinsurance backstop for seven years, while at the same time acknowledging that the ultimate bill is virtually certain not to contain the added provisions.

At the same time, Rep. Barney Frank, D-Mass.--chair of the House Financial Services Committee and chief sponsor of the more expansive House bill--said during a floor debate he is reserving the right to demand changes next year that would add two key provisions to the Terrorism Risk Insurance Act program.

Rep. Frank said his dilemma stems from the fact that the Senate is insisting its bare-bones, seven-year extension of the current program be the final product sent to President George W. Bush, who has threatened to veto anything more expansive.

However, with the program set to expire on Dec. 31 and Congress scheduled to finish its work by Dec. 21 at the latest, Rep. Frank admitted he will likely be forced to accept the Senate bill.

"There is no chance of this [terrorism reinsurance program] expiring," Rep. Frank said. "Everybody knows that. We have preserved our ability at any point simply to accept" the Senate bill.

"The question is, do we give up now, or do we send them the message that...the concern for the small insurance companies being able to insure commercial properties, and the concern for group life and not just property, that those are important issues?" he added.

"We can take that vote today [to pass the Senate's bill] and send that message," Rep. Frank said. "And if we have to, we will accommodate reality. But we will have sent that message, and it gives us a basis upon which to act next year."

Reacting to the House action, Joel Wood, senior vice president of government affairs at the Council of Insurance Agents and Brokers, did not dispute that the dramatic House vote was likely part of the end game for legislation extending the program.

"There's a great sense of relief and gratitude that the end is in sight," Mr. Wood said. "The passage of a seven-year extension of TRIA is a great credit to leaders in both the House and the Senate."

However, he cautioned, "'it ain't over until it's over, and until the president signs the legislation into law, it's still a time of anxiety for policyholders, brokers and insurers."

"With 70 percent of commercial policies expiring on Dec. 31, this is always the busiest time of the year for our sector of the financial services industry, and the uncertainty about TRIA has made it all the more frustrating," according to Mr. Wood. "But if somebody had told me at the outset of the year that the act would be essentially unchanged and extended for that duration, I would have dismissed it as a pipe dream."

Mr. Wood added that "all the histrionics aside, we're deeply grateful for the leaders on both sides of the aisle in both chambers who made this happen, and for the Bush administration's willingness to accept a strong compromise."

The vote on the latest House bill was 303-116.

Rep. Pete Sessions, R-Texas, during the debate characterized the House action as "legislative futility" in the face of Senate opposition and a promised White House veto. He also said the latest House bill will be "dead on arrival" in the Senate.

The White House had indicated earlier in the week that if the Senate's version were to be expanded as the House would like, President Bush would veto the bill.

Before passing its latest extension of government supports for insurers in the event of catastrophic losses from a terrorism attack, House Democrats covered themselves against the possibility their legislative gambit would fail.

They accomplished this by changing the bill's number, a parliamentary maneuver that lobbyists say acknowledged the likelihood that the Senate's version--preferred by the insurance industry--will be passed sometime before Congress is scheduled to adjourn on Dec. 21.

Before last week's vote, Democrats--led by Rep. Frank, the House bill's original sponsor--acknowledged the dilemma posed by Senate opposition to the House demand for expanded coverage.

To deal with that, the bill's number was changed before the vote to H.R. 4299, in place of H.R. 2761, which was the original House version of the Terrorism Risk Insurance Revision and Extension Act of 2007, sent to the Senate.

The Senate's response to H.R. 2761 was to pass a more modest version of TRIA extension with higher triggers, less expansive coverage and a shorter shelf life--seven versus 15 years. The House's latest version conceded a seven-year extension.

As Rep. Frank acknowledged during the debate on the latest House bill, "originally, we thought about taking the bill the Senate has passed, amending it and sending it back."

However, he added, in justifying the change in bill number, "I then heard that the Senate might be unable to function and that [an amended TRIA bill] wouldn't get through" before Congress departed for the year, thus risking expiration of the federal reinsurance program.

By changing the bill number and adding back House elements the Senate had deleted to its latest legislation, he noted, "we are saying to the Senate [that we are] not ready to...roll over and play dead."

However, acknowledging the Senate's strong position, he said that if the Senate rejected the House's new language, "we'll have to acquiesce."

During the debate, Rep. Frank explained "our disagreement over the role of preemptive surrender. I am unwilling at this point to let [debate] end without giving the Senate some chance to reconsider aspects" of the House bill.

Rep. Frank also dismissed the comments by Republicans that failure for the House to just concur in what the Senate had done doomed the bill for this year. He interjected during the debate to call the timing issue "a red herring," predicting that Congress will certainly have to ultimately act before TRIA's expiration.

House Democrats, led by Rep. Frank and Rep. Gary Ackerman, D-N.Y., had re-ignited the debate over the scope of TRIA extension legislation on Dec. 12 by introducing legislation expanding on the Senate's bill.

The Senate bill effectively extends the current legislation by seven years and adds claims from acts of domestic terrorism to the government reinsurance program.

The newest House bill restores provisions from the original House version that were deleted from the Senate's final bill. Tagged on was language adding group life, as well as provisions aimed at increasing terrorism insurance capacity for properties in urban areas seen as prime targets where there is currently a shortage of such capacity available, even with the current TRIA program in place.

The new House bill also reduces the size of a terrorism loss needed to trigger federal supports from the current $100 million to $50 million.

During the debate, Rep. Frank acknowledged that neither Democrats nor Republicans in the Senate had time for a conference committee to iron out differences between the two versions. Besides that, added pressure to take the Senate bill is coming from both the White House and House Republicans to accept the Senate's version.

A huge roadblock to the House's version was a statement of administration policy issued Dec. 11 in which the Office of Management and Budget said the Bush administration "strongly opposes" any amendments to the Senate version of the bill, and would recommend a veto to the president if any changes were made.

"Passing a bill that has already been pronounced 'dead on arrival' in the Senate foolishly puts the reauthorization of this important program in jeopardy as its expiration at the end of this year draws closer..."