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WASHINGTON, DC-During a mark-up session yesterday, members of the US Senate Committee on Banking, Housing and Urban Affairs from both sides of the aisle came to an agreement on legislation that would extend the Terrorism Risk Insurance Act of 2002 beyond it’s scheduled expiration date of Dec. 31, 2005. TRIA was passed following the Sept. 11 terror attacks and put in place a federal backstop stipulating that the government cover payouts exceeding $100 billion of insurers’ annual liability in the event of future terrorist attacks. The Terrorism Risk Insurance Extension Act of 2005, or S 467, contains new provisions that give the private sector insurance industry more responsibility. The extension would keep TRIA in place in its altered form through 2007, allowing Congress time to craft a long-term solution. For previous TRIA coverage, click here.

“This is a common-sense proposal,” says Sen. Christopher Dodd, who sponsored the legislation. “It reaffirms that we need to continue to remain vigilant in protecting our country’s economic foundation from any possible future terrorist attack or threat. This legislation provides a vital financial backstop that can help inoculate our economy from any potential future terrorist threat and protect jobs and our economy.” The TRIA Extension Act would cap the aggregate amount for all insurers of insured losses during 2006 at $17.5 million, with that figure increasing to $20 million for 2007.

The concern about continuing TRIA has been a hot-button issue for well over a year, garnering calls for an extension from a wide range of industries, including mortgage banking, real estate development, hotel and retail. Recently, a group of 28 governors banded together in a letter to congressional leaders dated Nov. 8, urging them to expedite an extension of TRIA. “If a federal terrorism insurance backstop is not continued in some form, businesses will face market conditions similar to those experienced after Sept. 11th,” the governors note in the letter. “Policyholders will likely pay exorbitantly high premiums for terrorist insurance, or simply be unable to secure it.”

The Coalition to Insure Against Terrorism, a diverse group of business insurance policyholders, has spoken out in support of the Senate bill. “If enacted, this legislation will ensure that the nation’s workers and businesses will be able to secure adequate and affordable insurance coverage against terrorism after yearend, and that the nation has a sound policy in place to enable the economy to quickly recover should another terrorist attack occur in the United States,” coalition members wrote in a letter to Senate leaders today.

In S 467, the Senate, also calls for action on the pursuit of a long-term replacement to TRIA. “The Presidential Working Group on Financial Markets shall, in consultation with the [National Association of Insurance Commissioners], representatives of the insurance industry, and representatives of policy holders, not later than June 30, 2006, submit a report to Congress containing recommendations for legislation to address the long-term availability and affordability of insurance for terrorism risk.”

The US House of Representatives is currently mulling over its version of the TRIA extension, a bill for which CIAT has also expressed its support. House members have introduced the Terrorism Insurance Backstop Extension Act of 2005. The proposed legislation, H.R. 1153, is currently with the House’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

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