Members of the Senate Banking Committee, staff and industry representatives were negotiating language in the legislation that would specify the amount of time and the process for the Treasury Department to recoup losses incurred by the program.
The goal of the talks, according to insurance industry sources, was to avoid any budgetary issues when the legislation is voted on by the full Senate. Under budget rules adopted by Democrats in both the U.S. House and Senate, any new spending by lawmakers must be offset by spending cuts or tax increases.
The estimate by the Congressional Budget Office has caused headaches for major insurers such as Travelers Cos. and Hartford Financial Services Group Inc.), which have aggressively lobbied Congress to extend the program.
The program, which was created in the wake of the Sept. 11, 2001, terrorist attacks, obligates the federal government to pay for a portion of losses from future attacks once they reach a certain threshold.
Insurance industry lobbyists said Tuesday's meeting was held to craft language that would address the budgetary concerns raised by the CBO. If successful, those familiar with discussions said, a vote by the full Senate on the legislation could take place later this week.
The estimates from the nonpartisan budget office have been roundly criticized by bill proponents, specifically because they assume an increase in the federal deficit regardless of whether there is a terrorist attack.
If Senate lawmakers are successful in passing legislation this week, it could set the stage for contentious negotiations with their U.S. House counterparts over the next month.
House lawmakers already passed a much broader 15-year extension of the terrorism insurance backstop and have pushed for formal negotiations once the Senate passes its version of the legislation. Senate lawmakers, however, have signaled little interest in formal conference negotiations.