The foiled terrorist attacks in the United Kingdom underscore the need for a continued federal role in U.S. terrorism insurance, say proponents of extending some version of the current government backstop.

The backstop, originally created by the Terrorism Risk Insurance Act of 2002, is slated to expire Dec. 31. Legislation that would expand and extend the backstop for 10 years has been introduced in the House of Representatives (BI, June 25).

"I think that the attacks are significant in several ways, most notably because they are still conventional attacks," said Ben McKay, senior vp of the Property Casualty Insurers Assn. of America in Washington. He noted that some experts have predicted that the next attack would involve nuclear, chemical, biological or radiological weapons, "but we're finding time and time again is that they actually continue to be conventional attacks."

"I think these attacks demonstrate that the need for TRIA, the underlying program very much still exists--maybe more so than ever. I think these attacks should give a needed measure of urgency to extending the underlying program and hopefully will enable Congress to focus on that," said Mr. McKay.

"It does bring into public recognition that the global terrorist threat is unfortunately very real and not confined to the 2001 tragedies," said Peter Lefkin, senior vp in Allianz of America Corp.'s Washington office. "Members of Congress and people within the Bush administration were certainly mindful of this fact before, but the most recent events bring forth a greater concentration on this fact. It emphasizes the fact that terrorism reinsurance is needed."

Marc Racicot, president of the American Insurance Assn. in Washington, noted that insurers are united in having a "meaningful, workable TRIA-like bill enacted by Congress before the end of the year."

He said attacks and attempted attacks in the United Kingdom underscore that there's no real distinction between acts of domestic and foreign terrorism. The current U.S. backstop covers only foreign-originated acts of terrorism, a distinction the new bill would erase.

He noted that the suspects in the U.K. attacks were in the country legally, and their acts wouldn't necessarily be classified as foreign acts of terrorism.

"You can never discount the fact that terrorism is real, that there is no distinction between foreign and domestic terrorism, and that it's being franchised," Mr. Racicot said.