The administration already has expressed opposition to the silo concept. The new assistant secretary of the Treasury for financial institutions, Emil W. Henry Jr., previously told National Underwriter that the administration is concerned that the concept is "too complex."

In addition to the silo concept, the bill would also establish sliding scales for the co-payments insurers would have to make and for the size of an event necessary to trigger government involvement.

Although many of the specific details of the bill remain unknown, those within the insurance industry expressed optimism regarding the bill.

Julian James, director of worldwide markets at Lloyd's, commended Committee Chairman Mike Oxley, R-Ohio, and Richard Baker, R-La., who has played a pivotal role in crafting the TRIA legislation, for their "encouraging and imaginative" extension proposal.

"Lloyd's believes the renewal of TRIA is critical to the U.S. economy, the insurance industry and its customers," Mr. James said, adding that the company "looks forward to working with the House Financial Services Committee, Congress, the administration, and other stakeholders in seeing its passage into law."

A spokesperson for the Coalition to Insure Against Terrorism==a consortium of businesses in the transportation, real estate, manufacturing, construction, entertainment and retail sectors==said that policyholders are "encouraged" that the committee will take up the legislation.

"Our goal remains a terrorism insurance backstop that is both workable and comprehensive," the spokesperson said, "and we look forward to working with
leaders in the House and Senate as they move closer to adopting such a program."

Carl Parks, senior vice president for government affairs for the Property Casualty Insurers Association of America, said that as outlined so far, the proposal "provides the
framework for a workable program to address the ongoing risks of terrorism.

"The program, as outlined, would give the industry the time to develop sound, market-oriented mechanisms to deal with the threat of terrorism while allowing a stable insurance marketplace to continue to function," he added.

Under the proposal, co-payments for insurers would range from 20 percent for an event causing $10 billion or less in insured damage to 5 percent for mega-disasters causing more than $40 billion.

The trigger for the first year of the extension would be $50 million in insured losses, up from the current $5 million, and increase to $100 million in the second year. For any year beyond that, the trigger would increase by $100 million.

The administration had proposed increasing the threshold for intervention to $500 million, which raised concerns within the insurance industry that smaller companies might not be able to participate in the program.

Mr. Parks said that while PCI "is aware of the pressures to move trigger levels and deductibles upward, Congress must also be aware that increases in these parts of the program could have a devastating effect on smaller companies wishing to participate in the terrorism insurance marketplace."

The proposal calls for insurers to repay the government through an assessment of no more than 3 percent of covered line premiums annually and has a "reset" mechanism to reduce the deductibles and trigger levels after a major event has occurred.

The proposal would also eliminate the distinction between foreign or domestic-based acts of terrorism and calls on the Treasury to craft rules encouraging the use voluntary risk sharing mechanisms, including mutual reinsurance pools.

Looking forward, the proposal also mandates the establishment of a commission to draft specific proposals outlining a long-term pooling terrorism bill to reduce government exposure and involvement. It is under this provision, if the government decides the recommendations are appropriate, that a third year could be added to the extension.