WASHINGTON, DC-The US Senate Banking Committee has passed ameasure to extend the federal backstop on terrorism insurance forthe next seven years. The Committee also voted to broaden the scopeof the coverage to include domestic terrorism as well asforeign.

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The bill, sponsored by Senators Chris Dodd (D-Conn.) and RichardShelby (R-Ala.), will move to the Senate floor for a full vote.Aside from its inclusion of domestic terrorism, though, the Senatebill is farnarrower than the one passed by the House ofRepresentatives last month.

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The House bill extended the backstop to 15 years; worse–at leastaccording to advocates of small government–it also added group lifeinsurance to TRIA and support for damages caused by nuclear,biological, chemical or radiological attacks. The Senate bill doesnot.

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Pres. George Bush has threatened to veto TRIA if Congress sendshim anything similar to the House bill. Terms in the Senate bill,though, would be acceptable to the administration.

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The insurance and commercial real estate industries expressedrelief that the process is moving along, never mind the additionalclauses. The “seven-year term would give businesses the ability toplan, finance and execute large-scale projects, which are essentialto support economic growth,” says Martin DePoy, the Coalition toInsure Against Terrorism Steering committee coordinator. “The billalso would eliminate the existing legislation's distinction betweenforeign and domestically sponsored acts of terror, which recenthistory has shown is no longer meaningful.”

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“Amid the expanding threat of foreign and domestic terrorism–andcontinuing absence of a private marketplace for terrorisminsurance–TRIA provides much-needed stability to the marketplace,”says Jeffrey DeBoer, president and CEO of The Real EstateRoundtable. Such praise, though, hides what has been at times afierce inter- and intra-industry debate on what the measure shouldinclude. The most contentious issue is the support for damagescaused by nuclear, biological, chemical or radiologicalattacks.

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Critics of the measure say it would raise property ratesdramatically. This type of coverage won't be subject to pricingcontrols, according to Aaron Davis, director of national propertybrokerage at Aon Corp. Also, its inclusion could be problematicbecause it could affect conventional terrorism pricing andcapacity, making the latter more expensive and scarce. “Whilenuclear, biological and chemical threats are real and something forwhich the insurance and real estate industries must prepare, theimmediate risks are conventional attacks,” he says.

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