Right now we're holding our breath to see what happens inCongress, but the first hurdles were passed recently whenlegislation to extend TRIA for an additional 15 years was approvedby the House Committee of Financial Services Committee,Subcommittee on Capital Markets in late July followed by the fullcommittee approval on Aug. 1. This new bill, H.R. 2761, theTerrorism Risk Insurance Revision and Extension Act (TRIREA),includes additional changes to the program that would benefitcommercial real estate even more by giving businesses a new optionto purchase insurance for catastrophic non-conventional terrorismrisks--nuclear, biological, chemical and radiological attacks--aswell as eliminate the distinction between foreign and domestic actsof terrorism.

With the 2005 TRIA extension ending at the end of this year, howCongress acts this fall could have implications that reach beyondour industry. In a news conference held last September,representatives from the Coalition to Insure Against Terrorism(CIAT), the Real Estate Roundtable, and the US Chamber of Commerce,among other groups, underscored that "an effective homelandsecurity program must include provisions to ensure the long-termavailability of affordable terrorism risk insurance to safeguardthe assets of the businesses that fuel the nation's economy."Research indicates that proactively reducing the financial impactof a future terrorist attack can actually reduce the likelihood ofthe attack. The 2006 Marsh MarketWatch Report on TerrorismInsurance analyzes the terrorism risk management impact of TRIAstating "a primary security goal of any potential terrorist targetis to deter an attack by aggressively influencing the terrorists'target research and risk/reward assessment."

The fact is, without a permanent solution insurance companieswill be hard pressed to meet demand. The Marsh Report concludedthat if TRIA is not renewed, or if no permanent solution is found,the stand-alone insurance market is unlikely to have sufficientcapacity to meet demand. The trickle-down effect of higherinsurance premiums often touches workers compensation policies aswell. The Marsh report also found that the stand-alone market forcasualty terrorism insurance, absent TRIA, is virtually nonexistentand that even with the 2005 TRIA extension, some insurers declinedto renew certain workers compensation policies because of a lack ofreinsurance capacity.