Bill Introduced To Extend TRIA 2 Years

By Arthur D. Postal , Washington Bureau Chief

NU Online News Service, Feb. 18, 4:06 p.m. EST,Washington?Legislation extending the Terrorism RiskInsurance Act for two years has been reintroduced by its primarysponsors, Sens. Robert Bennett, R-Utah, and Chris Dodd, D-Conn.

It was submitted in advance of a March 3 hearing set by theSenate Banking Committee to consider TRIA's effectiveness and needfor extension. Sen. Shelby confirmed the hearing date in astatement late yesterday.

The bill was originally introduced last summer, but failed topass in the waning days of the last Congress despite intenseefforts in session's closing days. The measure had broad,bipartisan support in the Senate, but died on the House floor.

Efforts to move it collapsed after House Majority Leader TomDeLay, R-Texas, objected to the two-year extension, and Democratsin the House rejected Rep. DeLay's proposal for a six monthsextension of TRIA pending further action in Congress this year.

Currently, TRIA expires Dec. 31, 2005.

The bill would establish a public/private partnership/commissionto take up the challenge of constructing a transitional terrorisminsurance backstop mechanism after TRIA ends, according toofficials at the American Insurance Association, whose members arekey supporters of the bill.

Leigh Ann Pusey, senior vice president of government affairs forthe AIA, said that, "Insurers and other stakeholders have beenundergoing an intensive process to explore longer-term options,something we all know is a vitally important goal."

TRIA extends a federal backstop against catastrophic terroristattacks by paying all costs of a terrorism attack as defined by thebill beyond a 15 per cent threshold of losses that are paid by theinsurance underwriter.

The three-year bill was enacted in late 2002, with the retentionthreshold starting at 10 per cent, rising to 12.5 per cent in thesecond year and 15 per cent this year.

"Congress must act quickly before TRIA expires. The threat ofterrorism still looms," Ms. Pusey said. "These two widely respectedsenators continue to show the leadership needed on this issue. Theywere there following the 9/11 attack, and they have stepped upagain to ensure our nation's economic safety net does not unravel,"she concluded.

Yesterday, Federal Reserve Chairman Alan Greenspan said duringtestimony on Federal Reserve policy before the House FinancialServices Committee that he is not persuaded that the private marketalone can work well enough to insure against the continuing threatof terrorist attacks.

A trade group funded by the National Association of Real EstateTrust noted that Mr. Greenspan's comments regarding terrorism camejust one day after Porter Goss, the director of the CentralIntelligence Agency, said in Senate testimony that the terrorismthreat endures. The group quoted Mr. Goss as saying that "it may beonly a matter of time" before extremist groups attempt to usechemical, biological, radiological or nuclear weapons in theU.S.

The group, the Coalition to Insure Against Terrorism, said that,according to Goss, al-Qaeda remains "intent on finding ways tocircumvent U.S. security enhancements to strike Americans and thehomeland."

Martin L. DePoy, steering committee coordinator of the Coalitionto Insure Against Terrorism (CIAT), and vice president forgovernment relations at the National Association of Real EstateInvestment Trusts said, "Americans are well aware that it is not amatter of if, but when, terrorists will strike again, a factreiterated by Director Goss."

Mr. DePoy added that, "Goss' observations, in combination withGreenspan's comments, underline the importance of Congress actingnow to provide for the availability of terrorism insurance nextyear." He said the risks cited by the CIA director "are almostwholly uninsured today."