Significant differences persist in the views of congressional leaders, some Republicans and the Bush administration over the long-term plan for federal involvement in terrorism risk, based on comments made by lawmakers and a White House official last week.

“We will, in April, pass a bill in the House extending the federal Terrorism Risk Insurance Act,” Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, declared at the Networks Financial Institute's Annual Insurance Reform Summit in Washington.

He added that the extended TRIA program, under the House bill, “will include group life” as well as chemical, nuclear, biological and radiological attacks.

The bill will also remove the distinction in the current program that only attacks by foreign-based terrorists trigger federal involvement in covering damages, he added.

The terrorism risk issue, he said, is a case of “market failure,” adding that he meant it not in the sense that the market acted badly, but in the sense that it cannot adequately provide coverage on its own. “The market was not designed to deal with these criminal acts,” he explained.

Also speaking at the summit was Sen. John Sununu, R-N.H., who cautioned against making the TRIA program permanent or expanding it unduly.

Although acknowledging that it is “likely that we'll have an extension this year,” Sen. Sununu said lawmakers should remember why they made TRIA temporary in the first place, and should look at extending the federal reinsurance program with the view of how to best help the private market assume terrorism risk. “We shouldn't take action that would preclude a private market from ever developing,” he said.

Sen. Sununu is a member of the Senate Banking Committee, and his comments run counter to statements made by the panel's chair, Sen. Chris Dodd, D-Conn., who has said in the past few months that he would like the TRIA program made permanent.

However, Sen. Sununu's vision for TRIA does apparently mesh with that of the Bush administration. Allan Hubbard, an assistant to the president for economic policy and a director of the National Economic Council, said the White House favors continuing to “phase out” federal involvement in the terrorism risk market.

The administration strongly supported increasing the burden of terrorism risk on insurers through higher co-payments and deductibles as part of the 2005 TRIA extension legislation. “The president believes, in the long run, that TRIA is not needed,” Mr. Hubbard said.

Meanwhile, Rep. Carolyn Maloney, D-N.Y.–speaking last week at a congressional hearing on TRIA at New York's City Hall in Lower Manhattan, blocks from the site of the Sept. 11 World Trade Center terrorist attack–said a draft of legislation to extend the federal backstop should be ready soon, but did not specify its terms.

A group of top real estate and insurance executives told the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises that 10 years would be the minimum amount of time needed for any extension of TRIA to have a positive impact on economic development.

Those same witnesses–along with Sen. Charles Schumer, D-N.Y., and New York Mayor Michael Bloomberg–said TRIA extension was vital to stabilizing an economic environment that could see building projects stalled by a lack of terrorism insurance.

Rep. Deborah Pryce, R-Ohio, the ranking minority member of the subcommittee, said there was general agreement among Republicans on the subcommittee on the need to extend TRIA, but no consensus on what kind of terms should be enacted.

TRIA extension advocates also urged that domestic acts of terrorism be included in the extension bill, along with group life.

No panel member advocated elimination of the TRIA program, although two members–Rep. Scott Garrett, R-N.J., and Rep. Ed Perlmutter, D-Colo.–expressed the most skepticism about the wisdom of an indefinite extension.

“This was not intended to be a permanent fix,” Rep. Garrett said. “We have talked about how we scaled back in the first extension, and now we should see how we can scale it back even further.”

But most other hearing participants took just the opposite position, urging development of a separate program for CNBR exposures, a lowering of the minimum company loss threshold from $100 million to $50 million, and an extension of 10 years at a minimum.

Warren Heck, chief executive officer of the Greater New York Mutual Insurance Company, said halving the minimum would be a good incentive to get small and medium-sized companies back into the terrorism insurance market.

Mayor Bloomberg said projects currently on the books that would create 46 million square feet of new commercial office space and produce an additional $10 billion in annual property tax revenue would never get off the ground without terrorism insurance.

“Although the current program does not expire until Dec. 31, the insurance industry writes and renews its commercial property policies months in advance–meaning we need to reauthorize this vital legislation now,” he said.