Terrorism backstop likely reality

A federal terrorism insurance backstop is likely to be implemented but observers say it may not be as thorough as the 2002-implemented Terrorism Risk Insurance Act, ending Dec. 31.Under testimony the Treasury Secretary John W. Snow says the Bush administration would not support an extension of TRIA in its current form.Furthermore, Snow a recent report released by the Treasury Department claims that the current terrorism program is hindering the development of a private terrorism reinsurance market, Snow said. He adds that to be acceptable to the White House, a program will have to boast a refined scope.Snow says the revised program would need to eliminate coverage for such lines as commercial automobile and general liabilityboth covered under TRIAand increase the point at which federal participation is triggered. The administration, according to Snow, does not promote the extension of TRIA’s backstop into group life insurance, an expansion favored by some Republicans and Democrats.Refusing to voice his support for the continuation of a federal terrorism backstop, Snow says instead he supports “reform,” which includes unspecified tort reforms as well as a scaling back of the federal role. However, Ben S. Bernanke, chairman of the Council of Economic Advisers, says he “would be happy with any legislation” that would require greater assumption of risk by the private market. Senate Banking Committee Chairman Richard Shelby, R-Ala., at a recent news conference claimed the committee will likely pass legislation creating a backstop, albeit a narrower and temporary one. Sen. Shelby, one of 11 senators voting against TRIA in 2002, says the committee could take up the issue in September.”I am committed to delivering a bill to the House floor this year,” House Financial Services Committee chairman Mike Oxley, R-Ohio, said at his panel’s hearing. “To do otherwise would be “the height of irresponsibility.”