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WASHINGTON, DC-The US Senate Banking Committee has passed a measure to extend the federal backstop on terrorism insurance for the next seven years. The Committee also voted to broaden the scope of the coverage to include domestic terrorism as well as foreign.

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

The House bill extended the backstop to 15 years; worse–at least according to advocates of small government–it also added group life insurance to TRIA and support for damages caused by nuclear, biological, chemical or radiological attacks. The Senate bill does not.

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

The insurance and commercial real estate industries expressed relief that the process is moving along, never mind the additional clauses. The “seven-year term would give businesses the ability to plan, finance and execute large-scale projects, which are essential to support economic growth,” says Martin DePoy, the Coalition to Insure Against Terrorism Steering committee coordinator. “The bill also would eliminate the existing legislation’s distinction between foreign and domestically sponsored acts of terror, which recent history has shown is no longer meaningful.”

“Amid the expanding threat of foreign and domestic terrorism–and continuing absence of a private marketplace for terrorism insurance–TRIA provides much-needed stability to the marketplace,” says Jeffrey DeBoer, president and CEO of The Real Estate Roundtable. Such praise, though, hides what has been at times a fierce inter- and intra-industry debate on what the measure should include. The most contentious issue is the support for damages caused by nuclear, biological, chemical or radiological attacks.

Critics of the measure say it would raise property rates dramatically. This type of coverage won’t be subject to pricing controls, according to Aaron Davis, director of national property brokerage at Aon Corp. Also, its inclusion could be problematic because it could affect conventional terrorism pricing and capacity, making the latter more expensive and scarce. “While nuclear, biological and chemical threats are real and something for which the insurance and real estate industries must prepare, the immediate risks are conventional attacks,” he says.

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