Last week,

TRIA was put in place following the 2001 terrorist attacks to allow for a federal backstop measure in which the government would cover payouts exceeding $100 billion of insurers' liability in the event of other such attacks. CIAT is also calling for a presidential commission to craft a permanent solution to the demand for terrorism insurance protection.

During his testimony, Lowe outlined a number of reasons for maintaining a terrorism insurance backstop such as because of its manmade potential for widespread destruction, insurers or their reinsurers will not be inclined to provide terrorism insurance without the guarantee of federal assistance; state-by-state controlled insurance regulations could lead to regional conflicts in the event of a multi-jurisdictional attack without a federal backstop; terrorism is targeted nationally, not regionally or locally and so the government should have a role in protection against terrorism's effects with regard to insurance. TRIA is part of a group of policies put in place post-9/11 in the war on terrorism and it works in conjunction with other existing relevant policies; and finally, in anticipation of TRIA's expiration many insurers are instituting "sunset" clauses in policies that are to be renewed this year, a practice that results in a decrease in economic productivity and the absence of substantial coverage in the event of another attack, Lowe pointed out.

"CIAT is unanimous in its belief that the Federal government must continue to provide a reinsurance backstop beyond 2005 if we are to avoid major disruptions to the economy," Lowe told the Committee. "Only a seamless continuation of the Federal backstop in some form in the meantime will avoid the more severe economic impacts, some of which already are emerging with the widespread use of sunset clauses in current renewal policies."