When the Terrorism Risk Insurance Act (TRIA) of 2002 was set to expiretwo years ago, Congress did a last-minute dance, extending the legislation through the end of this year, with a caveat to insurers: Get your act together now and create a commercial market absorbing terrorism risks. Once again, we are looking at TRIA's sunset, and there are still no signs on the horizon of a private-sector solution.

There is, however, a decided change in Congress, with the current Democratic leadership favoring another TRIA extension–and not even for a scant two years. "We're hearing another extension will sail through Congress," says John Iten, a director at Standard & Poor's in New York. "The Democratic leadership has a very different view than their Republican counterparts in terms of the desirability of a longer solution."

According to Capitol Hill observers, Congress is likely to be voting on proposals to either make TRIA permanent or at least give it a longer life of seven or even 10 years. "The Democrats who control the Senate Banking Committee and House Financial Services Committee, many of whom hail from larger urban states, are attuned to the risk of terrorism and understand that it is a unique exposure that does not lend itself to insurability," says Robert Hartwig, president and chief economist at the New York-based Insurance Information Institute.