A House of Representatives panel held a hearing Tuesday to discuss the viability and reauthorization of the Terrorism Risk Insurance Act, which is set to expire at the end of 2014.

TRIA, a risk-sharing program created in 2002 that provides a federal backstop for terrorism-related risks, was enacted in response to the Sept. 11 terrorist attacks on the United States, when a void in the insurance market was created when insurers and reinsurers could not price terrorism risks and withdrew from the market.

“TRIA was established in direct response to the events of that tragic day in 2001,” Judy Biggert, R-Ill., chairman of the Insurance, Housing and Community Opportunity subcommittee, said at the hearing.

“To give the private sector more time, twice the Congress has reauthorized TRIA,” she said.

Congress extended TRIA in 2005 and again in 2007.

The subcommittee heard from 12 witnesses from various segments of the insurance industry, including risk managers, insurers and industry associations, who mostly agreed on the extension of TRIA.

“TRIA has been a success,” said Janice Ochenkowski, managing director of global risk management for Jones Lang LaSalle Inc. in Chicago, who testified on behalf of the Risk & Insurance Management Society Inc.

“Without some form of backstop like TRIA, RIMS believes insurance companies will review their portfolios of business and will refuse to continue covering certain risks in areas where exposure is greatest,” she said in her testimony.

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But one expert witness argued that while TRIA served a very real purpose after the 2001 attacks, the federal backstop on terrorism risk should gradually phase out, as it was not intended to be a permanent program.

“We have now reached a point where the private sector is increasingly capable of providing that coverage at appropriate prices without government support,” David C. John, the senior research fellow in retirement security and financial institutions at the Heritage Foundation in Washington, said during the hearing. “In fact, the continued existence of TRIA may keep the industry from further progress.”

Christopher M. Lewis, senior vice president and chief insurance risk officer at Hartford Financial Services Group Inc. in Hartford, Conn., said terrorism remains an uninsurable risk, as the private sector does not have the information needed to assess the risk.

“Insurers lack any basis for assessing the likelihood or probability of a major terrorist attack, especially given the limited information that is publicly available,” he said in his testimony to the subcommittee on behalf of Hartford and the American Insurance Association. “While insurers can price insurance when the nature of the risk is estimable but highly uncertain, (before the event) insurance mechanisms fail when there is no credible basis for assessing the likelihood of an event.”

The subcommittee said it will hold further hearings to discuss whether the private sector is ready to provide reliable insurance and reinsurance coverage for terrorism-related risks without a federal backstop.