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WASHINGTON, DC-The US Senate Committee on Banking, Housing and Urban Affairs held a meeting on Wednesday to address the strengths and weaknesses of the Terrorism Risk Insurance Act. TRIA will expire on Dec. 31, 2007 is Congress does not extend or revise the program.

Committee chairman Sen. Christopher Dodd, and other committee members, heard evidence from nine witnesses as to the impact TRIA has had on the insurance industry and economy. While most panelists urged congress to approve various changes to the current system, everyone agreed that significant changes are needed to address nuclear attacks, an area previously overlooked.

“I am pleased to see that there is a general consensus that the option of doing nothing is not an option,” Dodd said at the closing of the hearing. Even panelist Travis Plunkett, legislative director for Consumer Federation of America, who was the loudest voice against extending the current TRIA, agreed something needs to be done to protect businesses from the more dangerous and difficult to predict nuclear attack.

The length of time TRIA should be extended for was the biggest bone of contention among the panelists. Plunkett called for the bill to be extended four to five years and then done away with to allow the private sector to be innovative and grow to meet the current demand.

President and CEO of the Macerich Co. Arthur Coppola, who testified on behalf of the Coalition to Insure Against Terrorism, called for the permanent enactment of TRIA. “In order to enhance the stability of our financial markets, the modernized program should be made permanent – or should be in place at least until Congress declares that terrorism is no longer a risk,” he said.

Janno Lieber, SVP of World Trade Center Properties, also called for a revised TRIA to be made permanent. He told the committee that without terrorism insurance it would be impossible to build the estimated $13 billion of projects slated for Downtown Manhattan, including four office buildings, transportation hubs and a World Trade Center Memorial. “In order to assure that commercial development thrives in lower Manhattan and, indeed, in all major urban centers, it is critical that the Government continue to work closely with the private sector and develop a long-term, workable solution, including some adjustments to the TRIA program.”

Several panelist including Jamie Veghte, CEO of XL Reinsurance America Inc., who testified for the Reinsurance Association of America, asked the committee to put forth a bill that would extend TRIA for a long period of time. “Due to the nature of the terrorism peril, the RAA believes that private market mechanisms alone are insufficient at this time to spread the risk of catastrophic terrorism loss in a meaningful way,” Veghte said. “Without some form of a federal role we would expect less coverage available at the policyholder level, rising prices for terrorism cover and even more limited private reinsurance capacity.”

Echoing the sentiment of many panelists, Dodd said that while the ideal situation would have the private sector providing all the insurance it was not possible at this point and government was needed to intervene. He pledged to put the issue before his fellow committee members and encourage them to act quickly in drawing up legislation for Congress to pass. While Dodd gave no exact timeline he said he’d like to be significantly advanced in the process before the fall so that the committee would not be up against the clock.

TRIA was first drafted in 2002 and then extended for a two year period in 2005, as reported by GlobeSt.com. If Congress fails to pass an extension before Dec. 31, 2007 the private sector will shoulder the nations terrorism insurance on its own – a task some are concerned will be overwhelming for the industry and lead to less available and more expensive insurance.

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