TRIA is due to sunset at year's end.

Sec. Snow also testified before the Senate Banking Committee on Thursday, where his softer message was juxtaposed against hardening positions from Senate Democrats, who indicated they would push strongly for TRIA's renewal.

During his testimony at the House Financial Services Committee hearing, Sec. Snow characterized the proposals for TRIA changes, which he had previously outlined in a letter accompanying the June 30 report, as “recommendations” from the administration for improving the program, not unequivocal demands.

In the June 30 letter to Committee Chairman Michael Oxley, R-Ohio, which had accompanied the Treasury's 142-page report assessing TRIA, Sec. Snow had called for a sharp increase in deductibles if the measure is to be renewed.

He wrote that the administration “would accept an extension only if it includes a significant increase to $500 million of the event size that triggers coverage, increases the dollar deductibles and percentage co-payments, and eliminates from the program certain lines of insurance, such as commercial auto, general liability and other smaller lines, that are far less subject to aggregation risks and should be left to the private market.”

While Sec. Snow reiterated that exact same message in written testimony presented to the House committee last week, during the course of the hearing he said the $500 million figure was open to discussion in response to questions from several members of the panel. The members noted that smaller attacks, such as those that occurred in London recently, would not meet the administration's proposed threshold.

“We can debate” the $500 million figure, he said in response to a question from Rep. Arthur Davis, D-Ala. “This is a best judgment.” Additionally, Sec. Snow said that the $500 million proposal was for an aggregate annualized figure, meaning that if several small attacks occurred within one year, their damages would be counted as a total for the purposes of triggering government payments under TRIA.

Rep. Richard Baker, R-La., who expressed overall support for Treasury's proposals, also expressed some concern regarding the $500 million threshold.

Reaching such a threshold, he said, would involve a far larger event in his district in Louisiana than would have to occur in New York City. Despite that concern, however, he suggested that the TRIA program was designed in haste and has shown the need for some revisions.

“We created this remedy out of whole cloth,” he said. “What's happening now is the suit is sagging in some place and we need to make some alterations.”

Rep. Paul Kanjorski, D-Penn, indicated that the administration could also face significant opposition if it attempts to include civil litigation reform provisions in TRIA extension legislation.

In his opening statement, Mr. Kanjorski expressed concern regarding the administration's call for “reasonable” legal reforms. “I am very concerned that such a posture could once again stall legislative efforts, as it delayed consideration of the original law,” he said.

Later in the hearing, he cautioned Sec. Snow that if the administration seeks to make the TRIA legislation an engine for tort reform, “that's dead on arrival.”

Overall, the secretary said that the administration's recommendations were being proposed because the TRIA program had largely taken the place of the terrorism reinsurance market and was, in effect, preventing the market from adapting and creating new products to cover post Sept. 11 terrorism risks.

On Thursday, Senate Democrats reacted.

“Any notion that TRIA has helped create this problem is not just misguided. It is dead wrong,” said Sen. Chris Dodd, D-Conn., responding to observations in Treasury's June report that TRIA “is crowding out the private reinsurance market.”

Sen. Dodd, who played a key role in drafting the original TRIA legislation, said, “I have yet to see anything in this report, empirical or anecdotal, showing this.” In fact, there are no comments “at all from reinsurers, just primary insurers,” he said.

“TRIA, in my view, has done nothing to crowd out the market for reinsurance. In fact, it is the opposite. There is not enough reinsurance,” Sen. Dodd said. If reinsurers are not going to write terrorism coverage, “failure to extend TRIA would only exacerbate the problem,” he said.

During the hearings, leaders of both the Senate Banking and House Financial Services Committee, Sen. Richard Shelby, R-Ala., and Rep. Oxley pledged to work toward TRIA renewal.

Rep. Oxley promised “to deliver a bill on the House floor by the end of this year.”

“Nobody is talking about ending [the] backstop. What we're talking about is revamping. The issue is can we make some improvements to the program to give the private sector more of a role to play.”

Treasury Secretary John Snow