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Terror Insurance Bill due Wednesday in US House

Terror Insurance Bill due Wednesday in US House

Sep 18, 2007
By By: Kevin Drawbaugh and Ed Leefeldt | Reuters | Reuters

WASHINGTON/NEW YORK – The U.S. House of Representatives is expected to consider on Wednesday a bill to extend the government’s terrorism risk insurance program amid controversy over its federal budget impact.

The House Rules Committee voted on Tuesday to send to the floor a bill to extend and expand 2002’s Terrorism Risk Insurance Act (TRIA), which is being closely watched by insurance companies and real estate developers.

Republican committee members warned that, in its present form, the TRIA extension bill would waive “pay-as-you-go” budget rules that Congress has followed strictly since the Democrats took over after last November’s elections.

“I find it very, very disturbing that we are taking this route … This provision does, in fact, waive pay-as-you-go,” said California Republican Rep. David Dreier.

Democrats replied that it was impossible to budget for the potential costs of TRIA, which makes the government the insurer of last resort in case of a terrorist attack resulting in massive damages that private insurers cannot handle.

“We can’t put money in (the budget) for terrorist acts that have not yet happened,” said New York Democratic Rep. Louise Slaughter, chairwoman of the rules committee.

Some Democrats on the panel, which controls how bills are handled on the House floor, said the Iraq war does not comply with pay-as-you-go policy. Moreover, they said, it is more important for the government to show its willingness to respond to a terrorist attack than to adhere to pay-go rules.

“If we have a terrorist attack, all bets are off. I don’t care about pay-go, go-go, go wherever the hell you want to go,” said Florida Democratic Rep. Alcee Hastings.

TRIA was adopted after the Sept. 11, 2001 attacks on the United States. Envisioned originally as a stop-gap measure, it is set to expire on Dec. 31, pressuring Congress to act fast.

The bill headed to the House floor would extend TRIA to 2017 and expand it by adding group life insurance and broadening coverage to domestic terrorism, as well as foreign.

It would also mandate coverage for nuclear, biological, chemical and radiological terrorism under certain conditions, and change the damage levels that would trigger TRIA.

The program, which has never been invoked because there has been no attack on U.S. soil since 9/11, is criticized by some as a subsidy to the insurance industry that impedes the possible development of private-sector insurance alternatives.

President George W. Bush threatened on Monday to veto TRIA. The White House said the House bill would make TRIA virtually permanent and called instead for it to be phased out.

But backers of extending TRIA say the private sector is showing few signs of being able to insure against terrorism and should not be expected to take on such risks.

The House bill was moving quickly along until recently when congressional researchers said extending TRIA could raise the budget deficit by billions of dollars if invoked. Democrats scrambled on Monday to develop language that would preserve the certainty of the TRIA backstop, but set up a legislative trip-wire before any TRIA money went out the door.

Importantly, the Senate has not yet acted on TRIA.

Jaret Seiberg, industry analyst at Stanford Group Inc., said, “We expect the House this week to pass a broad TRIA extension despite the White House veto threat … To us, the real story is what can the Senate pass.”

Robert Hartwig, president of the Insurance Information Institute, an industry group, said, “It’s still a negotiation process with the Senate to reach a final bill and there’s widespread belief that a consensus can be reached.”

 

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