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WASHINGTON, DC-The likelihood of an extension of the Terrorism Risk Insurance Extension Act of 2005, scheduled to expire on December 31, has just increased with the US Senate's passage of the Terrorism Risk Insurance Extension Act of 2005 this morning. The bill, S 467, calls for the extension of TRIA for two years beyond its expiration date at the end of the year, as well as changes to the original legislation. For previous coverage, click here.

The US Congress originally passed TRIA in response to the September 11, 2001 terrorist assault. The legislation instituted a federal backstop guaranteeing that the government would cover payouts exceeding $100 billion of insurers' annual liability in the event of future terrorist. The legislation, which ensures the availability of terrorism insurance, is supposed to help protect the economy by allowing investors and developers to continue insured projects.

The bill contains alterations to TRIA, including language that would increase the $5-million eligibility minimum required for the government to commence coverage to a $50-million minimum in 2006 and a $100-million minimum in 2007. And the Aggregate Retention Amount--the aggregate amount, for all insurers, of insured losses--would be $17.5 billion in 2006 and $20 billion in 2007. Additionally, the changes to TRIA as stipulated in S 467 would give the private sector insurance industry more responsibility for payouts to terrorism insurance policyholders.