The Bush administration is signaling it will give only guarded support for extension of the Terrorism Risk Insurance Act, which expires on Dec. 31.
The industry and Congress were intensely awaiting the mandated report from the Treasury Department for guidance on how Congress should proceed on possible extension.
The Treasury report issued June 30 did not voice much enthusiasm for how the program has worked during its 31-month life. It implied that it will support extension of the program, even for a limited period, only if there is less government involvement going forward.
The report made no policy recommendations regarding group life, which is not included in the present program.
The American Council of Life Insurers responded to the report by saying it was not surprised there were no policy recommendations made regarding group life because Treasury determined after a study that group life should not be covered by the current bill.
“This was a report about how the law worked,” said Jack Dolan, an ACLI spokesman. “Group life was not part of the law. The importance of the report to the group life industry is that the finality of the report begins a serious review of a TRIA extension by Congress. We will work diligently to communicate to Congress and the administration the critical importance of adding group life to the program.”
The ACLI’s argument to Congress and the administration “is that lives, not just bricks and mortar, should be of central importance when Congress crafts an extension to this program,” Dolan said.
In transmitting the report to the House Financial Services Committee, Treasury Secretary John Snow wrote, “It is our view that continuation of the program in its current form is likely to hinder the further development of the insurance market by crowding out innovation and capacity building.”
His letter added, “Consistent with its original purpose as a temporary program scheduled to end on Dec. 31, 2005, and the need to encourage further development of the private market, the administration opposes extension of TRIA in its current form.”