Bush administration opposes extension of TRIA, unless modified

Bush administration opposes extension of TRIA, unless modified    U.S. Treasury Secretary John W. Snow, told the Senate Banking Committee and the House Financial Services Committee that the Bush administration opposes extending the Terrorism Risk Insurance Act of 2002 (TRIA) in its current form.
   Snow, in a letter to the chairmen of the respective committees, said TRIA has served its purpose. 'It is our view that continuation of the program ' is likely to hinder the further development of the insurance market by crowding out innovation and capacity building,' he said.
   TRIA established a temporary federal program of shared public and private compensation for insured commercial property and casualty losses resulting from foreign acts of terrorism. A recent assessment of TRIA by the Treasury Department, as required by the act itself, found 'TRIA has achieved its goals of supporting the industry during a transitional period and stabilizing the private insurance market,' Snow said.
   'Any extension of the program should recognize several key principles, including the temporary nature of the program, the rapid expansion of private market development (particularly for insurers and re-insurers to grow capacity), and the need to significantly reduce taxpayer exposure,' Snow explained.
   The Bush administration 'would accept an extension only if it includes a significant increase to $500 million of the event size that triggers coverage, increases the dollar deductibles and percentage co-payments, and eliminates from the program certain lines of insurance, such as commercial auto, general liability and other smaller lines, that are far less subject to aggregation risks and should be left to the private market,' he said.
   Also, 'current litigation rules would allow unscrupulous trial lawyers to profit from a terrorist attack, and would expose the American taxpayer to excessive and inappropriate costs. The administration supports reasonable reforms to ensure that injured plaintiffs can recover against negligent defendants, but no person (should be) able to exploit the litigation system,' Snow noted.