Both the House and the Senate are considering legislation that would extend the Terrorism Risk Insurance Act of 2002. The act expires Dec. 31, 2005, creating possible coverage gaps in policies that extend into 2006. Federal Reserve Chairman Alan Greenspan provided impetus for the extension when he recently expressed doubts that the private market alone can work well enough to insure against the continuing threat of terrorist attacks.

"Catastrophic losses related to terrorist attacks continue to appear uninsurable, and we do not believe that a federal terrorism backstop should be allowed to lapse," said Charles E. Symington Jr., senior vice president of federal government affairs for the Independent Insurance Agents & Brokers of America. It could be difficult, if not impossible, for businesses to obtain insurance against losses related to terrorist acts, and that could have serious economic consequences in the event of another terrorist attack on American soil."

Senator Christopher Dodd (D-Conn.) introduced a bill that would extend TRIA for two years, through the end of 2007. The bill also addresses the long-term outlook for terrorism insurance, requiring that the Presidential Working Group on Financial Markets, in consultation with the National Association of Insurance Commissioners, representatives of the insurance industry, and representatives of policy holders, submit a report to Congress not later than June 30, 2006, containing recommendations for legislation to address the long-term availability and affordability of insurance for terrorism risk. The introduction of similar legislation by a group of House Democrats demonstrates a bipartisan effort toward protecting the U.S. economy against catastrophic terrorism.