Congress Sets Stage for TRIA Extension

Congressional action has set the stage for passage of a two-year extension of a federal terrorism insurance program before it expires at the end of this year.The Senate Banking Committee and the House Financial Services Committee passed separate bills Nov. 16 that would require property-and-casualty insurers to continue to offer terrorism insurance policies. Both bills would require the federal government to back up private insurers if property-and-casualty losses due to a terrorist attack exceed $50 million in 2006 or $100 million in 2007. The current trigger for the government to step in and pay claims is $5 million. The bills also increase deductibles and co-shares that shift more costs to the private insurance companies. However, the House bill (H.R. 4314), which cleared the committee by a 63-4 vote, provides government reinsurance for group life insurance and requires insurers to offer coverage for nuclear, biological, chemical, and radiological attacks. The Senate bill (S. 467), which was approved by a voice vote, does not include those provisions. The Mortgage Bankers Association said the renewal of the Terrorism Risk Insurance Act is essential to maintain the "smooth operation" of the commercial real estate finance market. "We anxiously await the opportunity to work with senators and House members to resolve differences within these bills," MBA senior vice president Kurt Pfotenhauer said.