Legislation to continue the soon-to-expire federal terrorism insurance “backstop” program is advancing on Capitol Hill. With Senate passage on Nov. 16 of a seven-year extension, the measure will next go to conference to work out differences with the House, which approved a 15-year extension in September.

The program is set to expire Dec. 31 and officials are nervously watching the calendar. The lead House negotiator, Financial Services Committee Chairman Barney Frank (D-Mass.), says after the two-week congressional Thanksgiving break, “We will be back for a couple of weeks in December and I think it is very important that we begin conversations about a compromise.” For his part, the top Senate negotiator, banking committee Chairman Christopher Dodd (D-Conn.), pledges to work to get a bill enacted.


Industry welcomed the Senate action. Clifton Rodgers, senior vice president with the Real Estate Roundtable, says, “We’re optimistic that an effective agreement will be reached and an effective bill will be enacted prior to year’s end.”

The House bill is more favorable to industry than the Senate’s version. The House bill has a longer extension and broadens the program’s scope. Rodgers also notes House language that “resets” insurers’ 20% deductible, initially to 5%, if a terrorist act causes insured losses of more than $1 billion. He says that’s an incentive to insurers to offer terrorism coverage in “high-risk” areas.

But the House measure also drew a veto warning from the White House, partly because of its 15-year duration. On the other hand, when the Senate bill was in committee, Treasury Secretary Henry Paulson said the administration would not oppose it.

Comparing House and Senate Bills
House (passed on Sept. 19)
Senate (passed on Nov. 16)
Extends program through 2022
Extends program through 2014
Adds group life to insurance
lines covered by program
Group life not covered
Mandates coverage against
nuclear, biological, chemical
or radiological terrorism acts
NBCR coverage not mandatory;
asks GAO to study issue
Lowers program �trigger� to
acts causing $50 million in losses
Keeps �trigger� level at
$100 million in losses

Sources: House Financial Services Committee; Senate banking committee

The federal program, which provides coverage if terrorism-related claims exceed certain thresholds, was established in 2002 in response to the Sept. 11, 2001, terrorist attacks. It was authorized for three years and in 2005 extended for two more years.

This time, a more lengthy extension seems likely. “What we have wanted very much was a long-term solution to this issue,” says a spokesperson for the Coalition to Insure Against Terrorism, whose members include real estate, construction and other industry groups. The coalition claims a two-year extension creates “real problems” for developers