Congress passed

TRIA was crafted as a response to economic damage caused by the September 11 terrorist attacks; damage that occurred partially as a result of the cessation or cancellation of real estate construction and development projects due to the sudden inability for companies to acquire--or afford--terrorism coverage. In addition to adding two years to the expiration date of TRIA, the extension law contains new provisions, among them the boosting of TRIA's activation level from $5 million to $50 million in 2006, and then to $100 million in 2007. Other stipulations include the increase in deductibles and co-payments, which will augment the insurance industry's responsibility; the repayment of 25% of federal aid for payments in 2006 and 27.5% for 2007 payments; and the creation of the President's Working Group on Financial Markets, which is charged with developing long-term solutions to supplant TRIA.

"Congress has agreed on legislative language that meets the critical goals set out by Treasury secretary John W. Snow when he delivered the Treasury's TRIA report in June: a significantly reduced TRIA program, more room for private sector innovation, greater protections for the taxpayer, and recognition of the temporary nature of the program," Treasury under secretary Randal Quarles says in a December 16 statement following Congress's settlement on a compromise bill; the US Senate's version was more closely aligned to the Administration's preferences. "Many thought these goals were not achievable when this debate began, but the House and Senate worked very constructively to achieve this outcome, and we think the American taxpayer can be satisfied with the result."

Groups, including real estate and insurance industry organizations, had been campaigning aggressively for TRIA's extension. "Extension of the nation's terrorism insurance program for two years is welcomed and necessary," says Martin L. DePoy, steering committee coordinator for the Coalition to Insure Against Terrorism. "It would have been difficult, if not impossible, for policyholders to obtain affordable terror coverage in the absence of such a program. Construction and hiring would have slowed. The nation's economic security would be in jeopardy."