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WASHINGTON--Key lawmakers from both chambers of Congress last week pledged to make extension of the federal terrorism coverage backstop--perhaps on a permanent basis--a high priority next year.
Speaking at a news briefing last week in Washington, Sen. Christopher Dodd, D-Conn., described the Terrorism Risk Insurance Act as "critically important" and added that his goal is to enact a permanent backstop program and not a temporary fix. Sen. Dodd in January will become chairman of the Senate Banking, Housing and Urban Affairs Committee, which has jurisdiction over TRIA.
In the House, Rep. Barney Frank, D-Mass., who will become chairman of the Financial Services Committee, said at a news briefing that extending TRIA was "absolutely" a priority for the committee, but he stopped short of endorsing a permanent extension. The federal coverage backstop program, he said, should be extended five or perhaps eight years and then re-examined.
TRIA, first enacted following the Sept. 11, 2001, terrorist attacks, is scheduled to expire on Dec. 31, 2007.
Rep. Frank said that extending TRIA is vital to the economic health of the nation's big cities. Without guaranteed terrorism insurance, "you will not get any big buildings built," because lenders will not provide financing, he said.
Indeed, the Risk & Insurance Management Society Inc. said in a position paper released last week that "time is of the essence to develop a long-term solution. Without a solution in place by Dec. 31, 2007, the country faces a catastrophic exposure to the economy."
Sen. Dodd acknowledged that the Bush administration is opposed--at least on ideological grounds--to a permanent TRIA extension, but added that he intends to work closely with the administration to try to develop a consensus.
Additionally, Sen. Dodd said he would like to begin work on TRIA legislation soon after the new congressional session begins in January and not in the fall "crunch time," when enacting legislation becomes more difficult.
For now, Sen. Dodd said he is asking insurers and policyholders to work together to develop common ground on a lasting solution.
Insurers and others say they are encouraged by the support of two key members of Congress to extend TRIA and their commitment to begin work on drafting legislation as soon as possible.
"We are encouraged by the comments of Sen. Dodd and Rep. Frank, and we will work together with them and other congressional leaders to ensure a workable long-term national terrorism insurance program," said a spokesman for the American Insurance Assn. in Washington.
Washington observers say it is virtually certain that Congress and the administration will agree on a TRIA extension, though an agreement will come only after much discussion.
"No one will get everything they want," said Joel Wood, senior vp with the Council of Insurance Agents & Brokers in Washington.
While the Bush administration currently may be opposed to a long-term TRIA extension, observers doubt that such opposition would lead to a veto of a legislative package passed by Congress.
"I just can't imagine a presidential veto," Mr. Wood said, adding that it is very unlikely that the administration would block responsible legislation to protect against the financial consequences of terrorism.
Others say there is overwhelming support in Congress for extending TRIA permanently, though it is too soon to say what a final TRIA bill would look like.
"A majority of members believe in a public-private partnership. The challenge is to come up with a proposal that everyone can agree on," said a spokesman in Washington for the Coalition to Insure Against Terrorism, which represents a wide range of businesses and organizations in the transportation, real estate, construction, entertainment and other industries.