Congress would be doing the nation an economic injustice if it fails to renew an federal backstop for terrorism insurance, Rep. Michael G. Oxley, R-Ohio, told an insurance industry meeting this week.
"It would be a travesty of enormous proportions for our economy should we not be able to extend TRIA," he told an audience of insurers and reinsurers at the annual meeting of the Property Casualty Insurers Association of America (PCI) in Chicago..
The terrorist attacks of Sept. 11, 2001, he noted, "did more than murder thousands of people. The attacks drained the insurance industry's surplus and threatened both marketplace solvency and our country's economy."
Mr. Oxley, who chairs the House Committee on Financial Services, continued that insurers began to non-renew commercial coverage "and large policyholders were unable to obtain insurance for their construction and development projects."
In response, TRIA was developed as a terrorism backstop by the Financial Services Committee six weeks after the attacks–less than three months later the House enacted TRIA, he said.
Mr. Oxley said TRIA was designed to be a short-term, temporary fix to address specific problems in the immediate aftermath of the attacks on 9/11. TRIA "succeeded in stabilizing the markets; now industry is seeking to extend that program," he observed.
Last year, he said, the committee passed a TRIA extension bill and continues to work with interested parties toward potential compromise legislation that could be enacted before the program expires this year.
He said he had made a personal pledge when Treasury Secretary John Snow testified before his committee, "that our committee and I are totally committed to reauthorizing TRIA." He noted that Secretary Snow has taken a personal interest in TRIA.
He added that he is working with the U.S. Treasury, the White House and the Senate "to make certain that we don't leave Washington for the holidays until we have passed a TRIA extension. I'm not sure what the details are going to be, but it would be a travesty of enormous proportions for our economy should we not be able to extend TRIA."
One of the concepts being discussed, creating a pooling or mutual reinsurance facility, he said, would allow dedicated private capital for terrorism risk to accumulate over time and gradually reduce the federal backstop.
Mr. Oxley praised PCI, saying it has been "at the forefront of the terrorism debate," working closely with the committee on TRIA. "This groundwork will pay dividends this year and in the future as progress on terrorism insurance reform continues," he said.
One concept that must be included in the House bill, he noted, is full taxpayer protection. The current program only contains partial taxpayer repayment provisions, he said. "Taxpayer protection is very important to me and the House leadership, and full payback provisions will be incorporated in any new terrorism legislation," Mr. Oxley said.
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