Insurance Bills to Be Taken Up Tomorrow by Senate Panel

The U.S. Senate Banking Committee announced it will meet tomorrow to consider bills that would renew the federal government's soon-to-expire terrorism insurance program and reform federal flood insurance.  
In a morning session sure to be of great concern to insurance industry members and real estate developers alike, the panel will open debate and likely hold votes on both measures.  
  
According to one source, Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and ranking Republican Richard Shelby, of Alabama, are believed to have reached an agreement on terrorism insurance bill that will be deemed acceptable by the Bush administration.  
  
Last month in a move that defied a White House veto threat yet pleased businesses, members of the House of Representatives voted to extend the Terrorism Risk Insurance Act (TRIA) through 2017.  
The TRIA program, enacted as a stop-gap measure in 2002 in the wake of the September 11 tragedy, makes the federal government the insurer of last resort for damages from a terrorist attack considered too great for private insurers to cover on their own. TRIA is set to expire on December 31 unless it is extended.   
  
Insurers and business interests are pushing hard for renewal, backed by Democrats and big-city Republicans, yet detractors criticize the bill as nothing more than an insurance industry subsidy and potentially too expensive. Supporters argue the private sector is showing few signs of being able to write adequate terrorism coverage and that a federal backstop is needed for economic security. President Bush has threatened to veto the bill, saying it would make TRIA virtually permanent and would result in limiting the growth of private-sector insurance.  
  
Besides extending TRIA, the bill would add group life insurance to it; broaden coverage to include domestic terrorism as well as foreign; and mandate nuclear, biological, chemical and radiological attack coverage under certain conditions. It would also change the damage levels triggering TRIA, which both backers and opponents agreed has helped stabilize property insurance markets since 9/11.  
  
In related news, the Senate Banking Committee also said it will take action on reforming federal flood insurance. The House voted last month to overhaul the almost 40-year-old National Flood Insurance Program, which was badly crippled by the 2005 hurricanes, including Katrina and Rita. The House bill would expand the flood program to cover wind damage in a response to outrage among some Gulf Coast homeowners over insurers' refusal to pay hurricane claims.  
  
Major insurers are closely watching reform efforts and lobbying hard to block a wind expansion of the program, arguing it would crowd them out of a viable business. The Bush administration has pledged to veto the House bill.  
  
The flood program was established in 1968 by Congress to provide coverage that private insurers would not offer. Today more than five million flood policies are in force, and more than 90 companies now get government fees to sell flood policies.