Washington – An extension to the Terrorism Risk Insurance Act (TRIA) has passed the U.S. Senate. The measure was approved on Friday by unanimous consent. The original TRIA was passed in wake of 9/11 and is set to expire on December 31.
“This is a tremendous victory for American workers, businesses and our national infrastructure,” says Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee. “The threat of terrorism tragically exists. We need to do everything in our power to protect the long-term security of our people and fortify and strengthen our economy.”
The Senate bill differs from the version that passed in the House in September in several important ways. The Senate version extends the federal backstop for seven years, whereas the House bill extends the program for 15 years. Additionally, the Senate bill also eschews coverage for attacks involving nuclear, biological, chemical or radiological (NBCR) weapons, which was mandated in the House version. Proponents of the NBCR provision say that since no private market exists to cover such risks, a federal mandate that insurers make NBCR coverage available is essential. Opponents of the provision say that enacting it will drive smaller carriers from the market.
These differences will need to be reconciled in a conference committee in the coming weeks. Rep. Barney Frank, D-Mass, who led the charge for TRIA extension in the lower chamber, has indicated that he is amenable to compromise. However, Frank has floated the idea of a temporary, 120-day extension, rather than have his hand forced by the looming deadline.
“The next step is just as critical–it's absolutely necessary that the Congress continue their work and reauthorize this program by year’s end,” says Marc Racicot, president of the American Insurance Association (AIA).
Another mitigating factor is the threat of a presidential veto. Soon after TRIA passed the House, the Office of Management and Budget released a statement that threatened to veto the legislation, singling out the NBCR provision as unacceptable. However, the administration soon softened its stance as Treasury Secretary Henry Paulson indicated that the President Bush would sign an extension as long as the final bill hewed closely to the Senate version.
Sources: Reuters, AIA, Senate Banking Committee, INN archives
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