Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

TRIA supporters confident of extension

Reprints
TRIA supporters confident of extension

WASHINGTON—The possibility that House and Senate committees could take differing approaches to extending the federal terrorism insurance backstop has not dampened supporters' hopes of winning an extension this year.

The differences were evident in remarks made by key lawmakers at the Council of Insurance Agents & Brokers' annual legislative summit last week on Capitol Hill.

While Senate Banking, Housing and Urban Affairs Committee Chairman Christopher Dodd, D-Conn., and House Financial Services Committee Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee Chairman Paul Kanjorski, D-Pa., agreed that the program will be extended, they did not agree on the nature of the extension.

"I'm not going to do another temporary bill," said Sen. Dodd. "We're going to have a permanent bill or we're going to move on."

Sen. Dodd added that he thought the "administration is softening" its opposition to any extension. The White House vigorously supported the original Terrorism Risk Insurance Act, which created a program that was to end Dec. 31, 2005. But the Bush administration opposed extending the program unless the backstop was significantly scaled back, which it was in the Terrorism Risk Insurance Extension Act that keeps the program alive through the end of this year.

Sen. Dodd said he thought Treasury Secretary Henry Paulson might be of help in keeping the backstop in place. As former chief executive officer of Goldman Sachs Group Inc., Mr. Paulson had numbered among the backstop's supporters.

"Permanency is not where we're coming from at this point," said Rep. Kanjorski. The House Committee probably would consider an extension of six to 16 years, he said. "We're certainly not going to do this year-to-year nonsense."

Rep. Kanjorski said Financial Services Committee Chairman Barney Frank, D-Mass., has said he wants a bill out of the full committee by April 2.

"There's no question we are going to have an extension," said Rep. Kanjorski.

'Different way to skin the cat'

Backstop supporters played down the importance of having a program that is long-term rather than permanent.

"I would characterize their differences as 'great news' and 'even greater news,' and not necessarily as inconsistent as you might think," said Joel Wood, senior vp of the CIAB. "I think Chairman Kanjorski was referencing a longer-lasting version of the same TRIA framework, whereas Chairman Dodd was indicating his openness to a different way to skin the cat. I'm confident that the depth of commitment from both leaders is sufficient to come to an excellent result for policyholders. The only caveat is that we—the industry, policyholders, other stakeholders—have to do our job."

"We've long advocated a permanent solution to this problem," said Martin DuPoy, steering committee coordinator of the Coalition to Insure Against Terrorism, a Washington-based group that represents policyholders.

"The politics of Congress and the administration interacting may result in something short of that. At the very least, the program needs to be of long duration. Having a program that expires every two years is very disruptive of business cycles," Mr. DuPoy said.

Although the industry would like a permanent program, "it would not be a deal breaker to have a long-term extension—the longer the better," said Frank Nutter, president of the Reinsurance Assn. of America in Washington. "In this town, six to 16 years is about as close to permanent as it gets."

While "I think we all would like a permanent program, Congress can always revisit legislation to tweak it if circumstances change," said Mr. Nutter, who noted the rationale for a long-term or permanent program is that much insurance coverage is tied to real estate financing mechanisms that are themselves long-term.

"It's encouraging they're talking about this early and, as for the details, Congress will work that out," said a spokesman for the American Insurance Assn. in Washington.

Regarding passage of a bill dealing with another high-profile insurance issue, key lawmakers from both sides of the aisle agreed that streamlining the regulation of reinsurers and surplus lines insurers is likely to enjoy broad support, at least in the House.

"I think the prospects are pretty good," said House Minority Leader John Boehner, R-Ohio.

"I'm confident this will become law this year," said Rep. Dennis Moore, D-Kan., who co-sponsored the Nonadmitted and Reinsurance Reform Act in the last Congress. The bill passed the House 417-0, but did not receive Senate action. Rep. Moore said he plans to reintroduce the bill "within the next few days."