Deadline nears on US terror insurance expiration

By Kristin Roberts

WASHINGTON (Reuters) – The U.S. House and Senate remain no
closer to a last-minute deal to extend a program of government
guarantees to cover losses from terrorism, despite compromise
language floated this week, sources said Wednesday.

The legislation would extend for two years the Terrorism
Risk Insurance Act (TRIA), a law that insurers, property owners
and some lawmakers call critical to construction and the
economy. Without extension, TRIA expires December 31.

The House and Senate have passed separate and distinct
bills to extend TRIA, passed after the September 11, 2001,
attacks to create a temporary federal program of shared
compensation for losses from terrorist events.

The Bush administration threw its weight behind the Senate
version, which it said narrowed the scope of the program and
reduced taxpayers’ potential liability.

House and Senate staff have been working on a compromise
bill informally this week. The chairmen of the House Financial
Services Committee and Senate Banking Committee were expected
to discuss TRIA on Wednesday, according to sources.

Compromise language was floated on Tuesday, but
congressional sources and lobbyists said the Senate is still
largely pushing for much of its original version of the bill.

“It’s not any closer than it has been,” one congressional
source said of the negotiations.

TRIA, passed after the attacks of September 11, 2001,
created a temporary federal program of shared compensation for
losses from terrorist events. It was aimed at keeping
construction and the economy moving when wary insurers were
reluctant to offer coverage.

Under the program, insurers must make terrorism coverage
available. In return, the U.S. government guarantees it will
bear a large percentage of future losses.

The property and insurance industries have pushed for an
extension, arguing they remain unable to judge the likelihood
of attack and therefore cannot price policies. But the White
House and many Republicans oppose extending TRIA without
curbing taxpayers’ potential liability.

The Bush administration criticizes the House bill, saying
it would expand the program to cover damage from attacks by
domestic terrorists like the 1995 Oklahoma City bombing. It
also would add group life insurance to the lines covered.

Compromise language discussed Tuesday would, among other
things, address one of the biggest issues in the disagreement
so far — language in the House bill that adds group life
insurance. The Senate did not include group life and the White
House said it would fight efforts to add that line to the
program.

The compromise discussed Tuesday would take group life out
of the bill, sources said.

Those sources said the compromise discussed Tuesday also
would require full payback of federal assistance, and create a
commission to make recommendations to Congress for an
alternative to TRIA.

It would adjust the House bill’s “silo” approach, which
separates and applies different deductibles by coverage area.
Workers compensation would be the only line broken out, under
Tuesday’s proposal.