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Deadline nears on US terror insurance expiration

Posted on: Wednesday, 14 December 2005, 09:56 CST

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.

Source: REUTERS

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