The U.S. government's terrorism insurance program, set up after the September 11, 2001 terrorist attacks, is set to expire at the end of the year. The Bush administration is calling for changes in the program if Congress decides to extend it.
The program, known as the Terrorism Risk Insurance Act of 2002, provides federal guarantees to help cover terrorism insurance losses.
It was created as a short-term effort to stabilize the private sector, which faced tens of billions of dollars in claims from the 2001 attacks.
Some property insurers, concerned the government program may expire, have begun writing sunset provisions into new policies that would leave some clients with potential gaps in terrorism risk coverage if Congress fails to extend the program.
The Bush administration opposes extending the program in its present form.
| John Snow |
Treasury Secretary John Snow told the Senate Banking Committee that his department could support a more restricted temporary measure that would encourage more private coverage and lessen taxpayers' potential liability.
"We think the private sector should be encouraged to assume more and more of these responsibilities, and we think it has the capacity to do that," he said.
The chairman of the Banking Committee, Senator Richard Shelby of Alabama, agrees.
"TRIA (the Terrorism Risk Insurance Act) has provided limited short-term benefits, but it has also I believe impeded the development of a broader solutions for the larger problems confronting the insurance marketplace. I think we must look to ways to restructure TRIA to avoid these negative consequences," he said.
But Democrats, including Senator Christopher Dodd of Connecticut, cite insurance industry skepticism with Mr. Snow's proposal.
"There is no evidence to support Treasury's suggestion that the expiration of TRIA will encourage the development of a private reinsurance market and other risk transfer mechanisms," he said.
Additional hearings on whether to extend the government terrorism insurance program are expected in the coming months.
