|Snow (Photo courtesy of U.S. Dept. of the Treasury)|
Under TRIA, Treasury covers 90% of terrorism losses over a deductible, which this year is 15% of an insurers 2004 premiums. It caps combined federal and insurance industry liability at $100 billion a year. Real estate, construction and insurance groups want TRIA extended two years. But in a June 30 letter to House and Senate committee leaders, Snow said the Bush administration "opposes extension of TRIA in its current form." Continuing the present program "is likely to hinder the further development of the insurance market by crowding out innovation and capacity building," he says. The administration would back an extension only if the size of a terrorist event requiring federal coverage were hiked to $500 million, from $5 million, he says. Treasury also wants insurers deductibles and co-payments raised.
Snows letter accompanied a long-awaited Treasury report on TRIA. It says the law has been effective overall, providing a transition in which insurers increased resources to write terrorism risk coverage. If the program expires, "it is reasonable to expect that the removal of the subsidy will result in a short-lived adjustment in coverage and pricing," the report concludes.
The study says 54% of policyholders said they had terrorism risk coverage in 2004, up from 27% in 2002. More policyholders now pay separately for terrorism coverage. For those buying separate coverage, the cost fell to 2.7% of premium in 2004, from 4% two years earlier.
Coalition to Insure Against Terrorism spokesman Martin L. DePoy says Treasurys report is "flawed." DePoy, who also is the National Association of Real Estate Investment Trusts vice president for government relations, says the study "fails to acknowledge that the risk of terrorism is unknowable."
But Congress is likely to insist on changes in TRIA. House Financial Services Committee Chairman Michael Oxley (R-Ohio) says that "a simple extension of the program is not in the best interest of American consumers or the economy." Senate Banking Committee Chairman Richard Shelby (R-Ala.) says TRIA as now configured "has created considerable market dysfunction which...has led to additional dependency on the federal government backstop."
Shelby plans a July 14 hearing on Treasurys report. He says a temporary TRIA extension may be needed, but it "should be narrow, targeted and minimize interference with our markets."
Spending: House Boosts Amtrak, Cuts GSA Renovations
The shift was part of a floor amendment approved June 29 to a Transportation/Treasury spending bill. It leaves GSAs repairs and alterations account with $393 million, down 58% from 2005.
Other key infrastructure programs fared well in the underlying bill, which passed June 30, 405-18. Federal-aid highways gets $37 billion, up 3% from 2005. The Federal Transit Administration receives $7.6 billion, up 11%. The Federal Aviation Administrations Airport Improvement Program rises 4%, to $3.6 billion.
EPA: Candidates For Two Posts Named
Susan P. Bodine, staff director and senior counsel for the House water resources and environment subcommittee, was nominated June 28 to be assistant administrator in EPAs Office of Solid Waste and Emergency Response. If confirmed by the Senate, Bodine would succeed Thomas P. Dunne, who has been acting administrator since Marianne L. Horinko resigned in June 2004.
President Bush also picked Granta Y. Nakayama to head EPAs enforcement office. A former naval engineer, Nakayama is a partner specializing in environmental law with Kirkland & Ellis. Thomas V. Skinner has been acting enforcement chief since April 2004.
GSA: Chief of Public Buildings Service Is Departing Aug. 1