In aftermath of 9/11, TRIA was among a series of bills passed by Congress. The bill is due to expire this year, and the House of Representatives plans to vote this week on a 15-year extension.
If the current version of the bill reaches President Bush, his advisors will recommend a veto, announced the White House Office of Management and Budget. The Bush administration said the government should remove itself from the insurance business soon and end the TRIA program, which is essentially a backstop support mechanism that ensures terrorism insurance is available and affordable for major projects and buildings.
Budget officials said, "The administration strongly opposes efforts to expand the federal government's role in terrorism reinsurance. The most efficient, lowest cost, and most innovative methods of providing terrorism risk insurance will come from the private sector.” The White House says it is worried over the potential long-term cost of the legislation, noting that a 10-year version could cost more than $10 billion, according to one estimate.
In sharp opposition, Rep.Pter King (R-NY) said "I strongly disagree. TRIA is absolutely essentially, and we will continue to support it and work for it one step at a time." Sen. Charles Schumer (D-NY) added the veto threat puts "ideology ahead of economic growth."
Schumer says TRIA is "s essential to construction and growth in many of our large cities. It is particularly needed now as the economy softens."
Businesses, particularly those based in New York, say that without the program they will not be able to get insurance coverage for nuclear, biological, chemical, and radiological attacks. Some local officials say that without the government program, they fear they may not be able to rebuild the World Trade Center site. Insurance groups warn that without terrorism insurance, builders may not find banks willing to lend money for buildings to be constructed.
The current program provides a federal insurance backup for catastrophic losses suffered in a terrorist attack, which the insurance industry says is needed because such attacks are so expensive and hard to predict. Under the bill headed for a House vote, the program can only be triggered when the amount of property and casualty losses reach $100 million.