GlobeSt.com UPDATE: Treasury's Snow Testifies on TRIA

WASHINGTON, DC-Just two weeks following the US Department of the Treasury’s release of its report on the status of the Terrorism Risk Insurance Act of 2002, Treasury Secretary John W. Snow is scheduled to take the microphone and testify on the subject before the US House of Representatives’ Committee on Financial Services this afternoon. Snow will speak about the Treasury’s and the White House’s report-based determination that TRIA should not be renewed.

The Treasury’s report, “Assessment: The Terrorism Risk Insurance Act of 2002,” concluded that while TRIA served its purpose as a transitional tool for the insurance market in the post-Sept. 11 climate, the legislation will have outlived its usefulness by the time it expires on Dec. 31 of this year, and that renewal in its present form would restrict growth of the private insurance market “by crowding out innovation and capacity building,” Snow noted in a letter attached to the report.

TRIA provides a federal backstop stipulating that the government cover payouts exceeding $100 billion of insurers’ annual liability should there be other terrorist attacks. Advocates of the legislation–including members of the real estate and mortgage banking industries–concede that TRIA is only a temporary solution, but support an extension of the act in an effort to develop a more suitable, long-term alternative. For their part, Snow and the White House have indicated that any renewal of TRIA must institute major changes, including parameters to reduce taxpayer responsibility.