The White House on Tuesday threatened to veto a revised House of Representatives version of a bill to extend and expand the U.S. government's post-9/11 terrorism risk insurance program.
The veto threat may further complicate already difficult negotiations between the House and the Senate over renewal of the federal insurance backstop that is set to expire on December 31 unless renewed by Congress and signed by President George W. Bush.
Major insurers and property development firms are watching closely as Congress wrestles over what to do with the controversial Terrorism Risk Insurance Act (TRIA) program.
Vital assistance or unneeded subsidy?
"With the current program set to expire at the end of this year, and millions of commercial insurance policies in the process of renewal beyond that date, it is critical that Congress act by the end of the year," said Dennis Kelly, spokesman for the American Insurance Association, which represents large property-casualty insurance companies.
Viewed as vital to New York City's economy by area lawmakers, TRIA promises federal assistance for private insurers in case of massive claims from a terrorist attack.
But critics of TRIA call it an unneeded subsidy to insurance companies that could afford to cover terrorism risk, but prefer not to, as long as the government will do it.
"The administration believes that the Terrorism Risk Insurance Act should be phased out in favor of a private market for terrorism insurance," a White House statement said.
If the House bill extending and widening TRIA were sent to President Bush as written, "his senior advisors would recommend that he veto the bill," the statement said.
White House prefers Senate plan
Plans for a House floor vote on the bill have been pushed back to Wednesday from Tuesday evening, said a House aide.
Companies such as Travelers Cos Inc, Allstate Corp, Chubb Corp, CNA Financial Corp and Nationwide Financial Services Inc are keenly interested in the deliberations, lobbyists said.
The House bill is slimmed down from an earlier version, but is still more expansive than a Senate bill, which the White House said it would not oppose.
Set up after September 11, 2001, TRIA was initially seen as temporary. With insurers healthier now than they were five years ago, the White House, consumer activists and lawmakers from low-risk rural areas want to begin shutting it down.
But a powerful alliance of big-city lawmakers from both parties, insurance companies and commercial property interests want TRIA renewed for many years and greatly expanded.
TRIA funds have never been tapped, since there has not been an attack on U.S. soil since 9/11, but its proponents say it has been crucial in stabilizing urban property markets.
The Senate passed a bill last month that would have extended TRIA for seven years, widened it to cover domestic as well as foreign attacks, and made few other changes.
The latest House bill concurs with the Senate measure, but would also widen TRIA to take in group life insurance; lower the damages trigger level at which TRIA funds could be tapped; and includes a "reset" provision that would ease TRIA fund access for insurers in areas already hit by terrorist attacks in case of another attack.
The Senate is refusing to go to conference with the House -- the usual way the two chambers work out their differences -- on TRIA. As a result, the House plans to vote on its latest bill and send it to the Senate for separate action there.
