WASHINGTON–Democrats in Congress will seek to extend the Terrorism Risk Insurance Act for as long as five years and to expand the program, Rep. Barney Frank, D-Mass., incoming chairman of the House Financial Services Committee, said yesterday.
His party's plan for TRIA constitutes a reversal of current policy under the Republican majority. The GOP, and especially the White House, insisted that the program be narrowed when it was extended last December until Dec. 31, 2007 and said this would be last extension of the program.
At the same time, industry officials privately cautioned that the House has consistently been more expansive about support for the government backup program for insurer's large terrorism losses than the Senate.
But Sen. Chris Dodd, D-Conn., who has generally been supportive of the industry and who played a key role in enactment of the original TRIA in 2002, will be taking over the Senate Banking Committee next year.
Sen. Dodd is due to comment on TRIA in an upcoming discussion of his agenda.
Rep. Frank made his comments at a press availability convened to discuss some of his priorities for the House Financial Services Committee next year.
“We will expand it,” he said in response to a question from National Underwriter. He mentioned group life insurance as one of the lines Democrats would provide TRIA support for.
This expansion will include coverage of nuclear, chemical, biological and radiation risks, he said.
Specifically, he said “his friends” at the Consumer Federation of America “have made a mistake in saying that TRIA is a subsidy to the private sector.
The CFA, especially its director of insurance, Robert Hunter, have repeatedly said that TRIA was a subsidy to the insurance industry and that adequate capacity existed to cover terrorism.
“What the hell can you [the insurance industry] do about someone flying a plane into the building,” Rep. Frank said. “It is not a result of negligence.”
He also said he didn't want “terrorists determining where a building should be built,” meaning in high-risk, high-profile areas like New York.
Democrats will also examine whether the TRIA program should be extended to provide backup insurance for floods and hurricanes, he said.
Rep. Frank's comments were an expansion of statements he made last week before the Consumer Federation of America that the Democrats will move early enough in the year on TRIA to provide certainty that it will be extended before its Dec. 31 expiration.
Republicans narrowed the scope of the TRIA legislation in the last Congress, and the White House made clear then it did not want the program extended.
Mr. Frank also reiterated that Rep. John Dingell, D-Mich., designated as chairman of the House Energy and Commerce Committee when Democrats assume control, is unlikely to be given oversight of insurance and securities activities.
That sector was previously one of the Energy and Commerce panel's responsibilities when it was headed by Rep. Dingell before Republicans took control in 1994, and he has been pushing to once again have supervision of financial services.
But, Rep. Frank said, “I believe it is unscrambling an egg, and I don't think it is going to happen.”
He made his comments after the House Democratic Caucus earlier in the day elected him chairman of the financial services panel for the 110th Congress, which takes office Jan. 4.
Under Democratic Caucus rules, chairs of exclusive committees (including the Financial Services Committee) are first nominated by the Democratic Caucus' Steering and Policy Committee and approved by a vote of the full Democratic Caucus. He will succeed Rep. Michael Oxley, R-Ohio, in the post.
Mr. Oxley is retiring from Congress, but would have lost his post due to Republican policy on term limits as well as the Democrats' return to control of the House.
Republicans are expected to choose between Reps. Richard Baker, R-La., the most senior Republican and current chairman of the Capital Markets Subcommittee, or Spencer Bachus, R-Ala.
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