Action On TRIA Extension Not Likely Until Next Year

Washington

Congress is unlikely to extend the Terrorism Risk Insurance Act until the middle of next year at the earliest, ending hopes that group life insurers could win inclusion in the federal safety net this year.

But staff officials of the American Council of Life Insurers say the group life industry will continue to push for inclusion in the legislation, either during the lame-duck session scheduled for mid-November, or, alternatively, as early as possible next year.

The latest version of the legislation restored group life to the legislation after it was removed from the version of the bill approved by the House Republican leadership.

But the bill died after Democrats balked at the legislation reducing the extension period from 2 years, as reported out by the House Financial Services Committee on Sept. 29, to 6 months.

Democratic support was crucial because the House was going to act on the bill through the so-called suspension calendar, which short-circuits the regulation process for bill processing. That requires two-thirds for passage.

Most lobbyists are putting a brave face on Congress unwillingness to act before adjourning, saying that they have hopes an extension can be included in omnibus legislation that will be acted on during a short lame-duck session to be convened in mid-November.

But the reality is that the last few days before Congress departed probably represented the best effort to have TRIA extended in this Congress. The compromise bill acceptable to House Republicans would have extended the law from the current Dec. 31, 2005, to June 30, 2006, added group life to the safety net provided under the legislation, and left the retention rate at 15% for the extension period. It also would have mandated that the Treasury Department complete its study on the effectiveness of TRIA and the need for its extension by April 2005 instead of June 2005.

However, it did not provide a separate pool for group life insurers, as that industry is seeking.

The bill faces problems in the lame-duck session that will occur in mid-November because of opposition from Democrats in the House and the fact that Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, repeatedly has made it clear he doesnt want to act on an extension until he has the Treasury report on the issue in front of him.

Julie Rochman, senior vice president of public affairs for the American Insurance Association, when asked about Sen. Shelbys views, confirmed reports that he plans to hold hearings on the issue in March and craft legislation based on the Treasury report when it is completed in June.

Rochman said, “I believe that is possible that Congress will act in the spring, before the Treasury study comes back.” But, she added, “Sen. Shelby has been very clear and consistent that he wants to see the results of the Treasury study before acting. And he is very important to this legislation.”


Reproduced from National Underwriter Edition, October 14, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.