The Risk and Insurance Management Society Inc. (RIMS) will bedescending on Capitol Hill on June 12 and 13 to push for anextension of the Terrorist Risk Insurance Act (TRIA). Passedoriginally in 2002 in the wake of the 9/11 attacks on the WorldTrade Center and Pentagon, the TRIA legislation was designed toprovide a federal government backstop to the insurance industry tocover catastrophic losses from terrorist attacks. Essentially, thebackstop guarantee has allowed the industry to offer affordableterrorism coverage to U.S. companies. Initially conceived as athree-year program with the idea that private industry wouldeventually shoulder the burden, TRIA was extended for another twoyears at the end of 2005, although the government raised thetrigger, to $50 million in losses in 2006 and $100 million in 2007,from $5 million, at which point it would begin to share in thecost. Now, RIMS will be pushing for at least a 10-year extension ofthe program, scheduled to sunset Dec. 31, 2007, and the inclusionof nuclear, biological, chemical and radiological (NBCR) exposures.“We think TRIA is a matter that is essential to the nationaleconomy, not a bailout for the insurance companies,” says TerryFleming, a RIMS board member and its director of externalaffairs.

The group is likely to receive a warm welcome from Congress.While it is unclear where the Bush Administration stands on theissue, Fleming acknowledges that there is broad support on bothsides of the aisle for extending TRIA. While no legislation hasbeen introduced yet, both Sen. Christopher Dodd (D-Conn.), whochairs the Senate Banking Committee and Rep. Barney Frank(D-Mass.), chair of the House Financial Service Committee, haveindicated they will fast-track a long-term extension in Congress.“Indications are that they're looking at [an extension of] betweensix and 15 years. We're hoping for something in the area of 10years,” says Fleming. “We hope that will encourage investment bythe capital markets to help establish some capacity for the NBCRexposure.”

While in D.C., RIMS will also be lobbying for changes in the lawthat would make it easier and less costly for insurers and theircorporate clients to buy and sell coverage across state borders byestablishing a federal authority. The two pieces of legislationbeing considered by the Congress are known as the optional federalcharter initiative, which would offer companies operating acrossstate borders the option to operate under a single set of federalinsurance rules, rather than individual state regulations, and thesurplus lines bill. This legislation would allow companiesoperating in many states across the country to buy auto insurancefor all company vehicles from a single insurer in their home state,rather than seek coverage through a licensed insurer in each state,as one example of its impact. “What the surplus line and optionalfederal charter will do is establish a federal authority so thatyou only have to file the rate and form information in the homestate of the insured,” says Fleming, adding that it will eliminatean administrative nightmare for companies. Fleming is optimisticthat the surplus lines overhaul, which was passed by a wide marginin the House during the last session, will pass this year, but addsthat the outlook for passage of the optional federal charterlegislation is much less bright.