The debate is over whether to seek changes in the program, which could be a politically risky strategy, or simply work to extend the program as it is, despite the fact that it might not be achieving its intended goal, he said.

“It could create problems if we push too hard,” according to Mr. Rusbuldt.

Gary Karr, a representative with the Washington-based American Insurance Association, agreed. “There isnt a full consensus on what to advocate,” he said.

However, there is a broad consensus, he said, that the private market is not now, and likely will not be what it was prior to the Sept. 11, 2001, terrorist attacks. There must be some solution to the problem, Mr. Karr said, but as to exactly what that is, there is no consensus.

It is not just a political question, Mr. Karr added. The concern is what is best for the marketplace, he said.

Julie Gackenbach, assistant vice president of federal government relations with the Property Casualty Insurers Association of America in Des Plaines, Ill., noted that insurers want the program to be temporary and to have a marketplace solution to the problem of terrorism coverage.

However, she said, the market has not responded to the extent some companies had hoped. There are still pockets where the reinsurance market has not come back, Ms. Gackenbach noted, citing workers compensation as a prime example.

Mr. Rusbuldt said there is a huge psychological need in the marketplace for the TRIA program to be extended.

But the fact is, he said, despite TRIA, terrorism insurance is still very expensive and many businesses are not buying it.

The problem, he said, is the allocation formula, under which the U.S. Treasury Department, acting as a reinsurer, pays 80 percent of losses over a deductible.

The industry might ask Treasury to assume a higher share of losses, Mr. Rusbuldt said, but he stressed there is no consensus on anything.

Extension of TRIA already faces opposition. Wayne Abernathy, assistant treasury secretary for financial institutions policy, has said that Treasury opposes TRIA extension (see NU, Dec. 22/29, 2003, page 5).

Mr. Rusbuldt added that many Republicans on Capitol Hill would be inclined not to support an extension, especially if it increases the governments role in the marketplace.

Mr. Karr noted, however, that TRIA requires Treasury to conduct a study on the private market for terrorism insurance, which is currently underway. It is highly unlikely, he said, that Congress will consider TRIA until the study is completed.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.