Mr. Ayer was representing the Washington-based American Insurance Association as well as The Hartford in his comments.

Mr. Ayer's remarks also seemed to be aimed at preparing insurance industry customers and investors for the possibility that in order to win extension of the law, which expires Dec. 31, insurers will have to agree to "take a sizable retention," which could lead to higher rates.

The current per-company retention is 15 percent of 2004 direct earned premiums. Some conservatives on Capitol Hill are seeking to increase that amount to perhaps 20 percent.

Mr. Ayer's comments responded to calls by House Republican leaders, including House Majority Leader Tom DeLay R-Texas, for a "market-based approach" to terrorism insurance, rather than continuing a direct federal role in the marketplace.

"The insurance industry needs TRIA and a continuing federal backstop," Mr. Ayer said. "Absent TRIA, we are challenging our economy in ways that we shouldn't."

But, he said, "a longer-term solution is going to take a lot of time" to develop, something most insurance industry lobbyists don't believe will be available in Congress this year.

Mr. Ayer agreed with comments by Rep. Pete Sessions, R-Texas, another speaker at the conference, that a longer-term solution will have to involve protecting insurance industry capital against a nuclear, chemical, biological or radiation attack. "NCBR is not something the insurance industry could respond to," he said.