"To ask the insurance industry to absorb loss resulting from an attack against our nation places the U.S. economy and our national security at great risk," Mr. Degnan said in prepared testimony representing virtually every major insurance company and agent trade group.

"Without a risk-spreading mechanism, the right attack could very well bring the insurance industry to its knees and significantly destabilize our economic infrastructure, achieving a primary aim of the terrorist," he said.

"We simply cannot afford to let TRIA expire and leave this important matter to chance," Mr. Degnan said.

To date, he said, terrorism risk cannot be modeled or predicted with any accuracy. Past terrorist attacks, Mr. Degnan said, are not predictive of future terrorist attacks and the full range of possible attacks can never truly be known.

Terrorism risk defies normal underwriting and rating principles, effectively limiting the ability of property-casualty insurers to advance a private mechanism for that risk.

Congress must act now to extend TRIA, Mr. Degnan said, to avoid destabilizing the marketplace. TRIA, he noted, expires on Dec. 31, 2005. However, he said, the insurance policies that rely on TRIA are written every day usually for a 12-month term.

This means, Mr. Degnan said, that some policies will be written before the expiration date, but extend beyond it. Insurance companies, he said, will have no choice but to evaluate every policyholder considered for coverage during this period as if the backstop will not exist for at least part of the coverage period.

(Mr. Degnan testified on behalf of a wide range of associations. On the company side, the associations include the American Insurance Association, the Financial Services Roundtable, the National Association of Mutual Insurance Companies, the Property Casualty Insurers Association of America, the Reinsurance Association of America, the Surety Association of America and UWC--Strategic Services on Unemployment and Workers' Compensation.

(On the agent side, the associations include the Council of Insurance Agents and Brokers, the Independent Insurance Agents and Brokers of America and the National Association of Professional Insurance Agents.)

Donna Lee Williams, the Delaware Insurance Commissioner, also urged Congress to extend TRIA this year.

"Because some terrorism risks are largely uninsurable without a financial backstop, state regulators are very concerned that significant market disruptions will develop before TRIA's expiration," Ms. Williams said on behalf of the Kansas City, Mo.-based National Association of Insurance Commissioners.

By changing the expiration date to Dec. 31, 2007, she said, Congress would have about 15 months to digest and debate the Treasury Department report on the effectiveness of TRIA, which is due on June 30, 2005.

From a reinsurance standpoint, Jacques E. Dubois, chairman of Swiss Re America, said that for the most part, his company does not provide terrorism reinsurance because it cannot quantify the frequency or severity of possible events.

A two-year extension of TRIA, Mr. Dubois said, will provide protection to the insurance and reinsurance industry while allowing additional time to assess terrorism risk.

He added, however, that it may never be possible to capture, in a model, the intentions of human minds that strive to inflict maximum devastation and human suffering.

But J. Robert Hunter, director of insurance for the Washington-based Consumer Federation of America, said TRIA is not necessary and should be allowed to expire.

The insurance industry, he said, is more than ready to stand on its own two feet.

"The ability of the industry to insure against terrorism is enormous and growing, profits are quite substantial and the financial condition of insurers overall is rock solid," he said.