WASHINGTON—A key lawmaker wants to work with the Treasury Department during the August recess to devise alternatives to the existing federal terrorism insurance backstop provided by the Terrorism Risk Insurance Act.

Rep. Richard Baker, R-La., made that offer during a hearing about the future of terrorism insurance before the House Financial Services Committee's Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. Rep. Baker, who chairs the subcommittee, said it is "very clear" that the White House will not accept a simple exten-sion of the current program, which is set to expire on Dec. 31.

A June 30 Treasury Department report said that the administration would oppose extending the current program unless it under- went significant changes. Among other things, the administration would require that the private insurance market accept a greater share of terrorism risk than it does currently under TRIA.

In addition, the administration wants the trigger that activates the government backstop raised to a minimum aggregate $500 million in insured damage. Under current law, a qualifying terrorist attack causing as little as $5 million in insured damage could trigger the backstop under certain circumstances.

The administration also wants to remove certain lines of coverage, such as general liability and commercial auto, from the backstop's protection and to use any backstop extension legislation as a vehicle for tort reform.

But last week's hearing made clear that even some Republican members would rather expand the existing program to cover group life insurance as well as property casualty lines rather than scale it back.

And the subcommittee's Democrats continue to push for a bill that would add group life to TRIA's protection while extending the current program for two years.

Rep. Barney Frank, D-Mass., who co-sponsored the Democratic TRIA extension bill, stressed that TRIA was not just to benefit insurers. "The prime beneficiaries of this legislation are not the insurance companies; they are the insureds," he said.

One witness representing policyholders called for another extension of the program. James E. Maurin, president of Covington, La.-based Stirling Properties Inc., speaking on behalf of the Washington-based Coalition to Insure Against Terrorism, said that the government backstop should apply to acts perpetrated by domestic terrorists as well as foreign terrorists.

He also called for swift congressional action on the terrorism insurance question.

"When the current program expires, so does our coverage," said Mr. Maurin.

During the hearing, how to provide a long-term answer to the question of the terrorism insurance market's future was on the minds of both witnesses and lawmakers.

Several witnesses, notably District of Columbia Insurance Commissioner Lawrence Mirel, proposed creating a privately funded terrorism risk pool along the general lines of government-created pools in the United Kingdom, Germany, France and Spain.

Congress would have to enact legislation creating such a pool, said Mr. Mirel. While the federal government would remain the ultimate guarantor, its role would steadily diminish as the pool grew, he said. Mr. Mirel suggested that the pool could be funded by "a very small charge" on policies backed by the pool.

Mr. Mirel said that he believes that if Congress would establish a pool, the insurance industry would do a good job of putting it together, and doing it quickly.

Rep. Baker noted, however, that Congress is on a tight timetable to act on terrorism insurance legislation before its proposed October adjournment. He said that he intended to consider alternatives over the current recess. But any alternative would have to meet three aims, said Rep. Baker.

The first aim would be to provide market stability with less taxpayer exposure by requiring private insurers to assume an increasing amount of the terrorism exposure, just as the Treasury report advocated.

Rep. Baker's second aim would require insurers to repay over time any money they had received from the federal government to pay for losses arising from a future catastrophic terrorist attack. Under current law, repayment of funds would be at the discretion of the Treasury secretary.

The third aim would be replacing the minimum $500 million aggregate trigger that the Treasury report held was necessary for White House backing with some sort of "relative trigger."

Rep. Baker said he believes the proposed $500 million trigger would be too high to provide relief in the event of any attack that could occur outside of a major metropolitan area. He suggested instead a trigger based on some measure of commercial property valuation in the attack area that would be adjusted upward over time.