With yet another drop-dead date for the Terrorism Risk InsuranceAct (TRIA) at the end of the year, Congress is once again directingits attention to the proverbial question of whether privateinsurance companies can shoulder the burden of providing companiescoverage for terrorism-related risk–that is, without the governmentguarantee TRIA provides to pick up most of the damages in the caseof an attack.

While the availability and affordability of terrorism riskinsurance has improved since the terrorist attacks on September 11,2001, most insurance experts agree that without the renewal ofTRIA, insurers and reinsurers would exit the market. “Without TRIAas a backstop,” says Jill M. Dalton, managing director for theNorth American property practice at Marsh & McLennan Corp,“terrorism coverage will be in short supply and be prohibitivelyexpensive.” Dalton notes that uncertainty over TRIA could bedisruptive for the normal property renewal procurement process.

Dalton has cause for optimism. The Democrat-controlled Congresshas made the extension of terrorism insurance a centerpiece of itslegislative efforts, and in the first set of hearings in New Yorkthis week, Democrats basically heard what they wanted to hear–thatthe insurance backstop provided by TRIA is vitally necessary. ForDemocrats right now, it is a question of whether to make thelegislation permanent or extend it seven to 10 years. But there issome question as to where the White House stands. Dalton says thata recent report from a presidential working group reviewingterrorism risk insurance failed to endorse the extension. The otherthreat is the possibility that senators from the Gulf States mighttry to add a natural catastrophe insurance plan onto TRIA. “If thatgets added to it,” says Dalton, “that could kill TRIA becausethere's not a lot of support for a national natural catastropheplan.”