Congress Extends Terror InsuranceDec 19, 2007
Federal backstops for terrorism insurance, a result of the Sept. 11 attacks, would be extended for another seven years under legislation the House passed Tuesday and sent to President Bush.
The House approved the Senate version of the Terrorism Risk Insurance Act after the White House made clear that original House plans to expand the scope of the program would engender a presidential veto. The White House has indicated that Bush will sign the Senate-passed bill. The vote was 360-53.
The administration contends that the program, known as TRIA, is a temporary response to the 2001 terrorist attacks and should be phased out in favor of a private market for terrorism insurance.
The insurance and real estate industries have pushed for an extension of the program, saying federal guarantees to help cover catastrophic losses are crucial to stimulating the investment needed to keep the economy growing.
“Today’s vote is a major accomplishment and will help extend the market stability and certainty that TRIA has provided since its enactment in 2002,” said former Montana Gov. Marc Racicot, president of the American Insurance Association. “This action is critical to businesses throughout the nation that rely on insurance to protect them from the threat of terrorism.”
The program was enacted after the Sept. 11 attacks, when reinsurers said they would no longer cover losses from such attacks. Reinsurers provide insurance for insurers willing to take on the risk of major losses. It was extended once in 2005, with the program set to expire at the end of this month.
The House in September approved a more ambitious plan that extended the program for 15 years, lowered the threshold for triggering federal aid to $50 million, from the current $100 million and specified that nuclear, biological, chemical and radiological attacks would be covered. It also added group life insurance to covered items and ensured that areas hit by terrorist attacks could get insurance in the future. The Senate in November responded with legislation that basically keeps the current program intact.
House Financial Services Committee Chairman Barney Frank, D-Mass., took another shot last week, pushing through a second bill that accepted the Senate’s seven-year extension and kept the $100 million threshold. But that too had to be discarded when it faced insurmountable opposition from the White House and key Republicans in the Senate.