Organizations representing the insurance and real estate industries are making a case for a federal backstop in response to a request for public comments by the US Treasury Department. The plans are to send a report on the long-term availability of terrorism risk to Congress by Sept. 30.

"The same hurdles that have made it difficult for insurance industry to accurately model this risk have also prevented them from coming up with private sector solution to this problem," says Martin L DePoy, steering committee coordinator for the Coalition to Insure Against Terrorism Risk. "I think Congress is hopeful that a private sector solution could come to fruition. But given the risks that are involved and potential for catastrophic loss [a private sector solution] doesn't seem to be viable at least for short term."

The Secretary of the Treasury chairs the President's Working Group on Financial Markets. This panel--which also includes the chairs of the Federal Reserve Board, Securities and Exchange Commission and the Commodity Futures Trading Commission--has been mandated to develop a long-term private sector solution to terrorism risk insurance. That answer would include group life coverage and coverage for chemical, nuclear, biological and radiological events. These risks were specifically excluded from TRIA. Insurers and real estate industry representatives are now including these possible scenarios in their loss modeling.