The US Senate Banking Committee has approved a seven-year extension to the Terrorism Risk Insurance Act (TRIA), which was due to expire at the end of this year.

Insurance companies stopped offering terrorism coverage following the September 11 2001 attacks, and TRIA was created to provide a government backstop.

Industry groups have campaigned for its reauthorisation, warning that without it coverage would become more expensive and less available, harming the wider US economy.

The committee unanimously passed the Terrorism Risk Insurance Program Reauthorisation Act, which will now go to a full Senate vote.

Committee chairman Tim Johnson says the extension will “help promote economic growth and provide certainty for commercial property development and job creation”.

The American Insurance Association has welcomed the move and urged the full Senate to pass the Act as soon as possible.

“TRIA is an effective partnership between private market insurers and the Federal Government that provides for an orderly economic recovery in the event of a terrorist attack,” association President Leigh Ann Pusey said.

“The program maximises private market risk-bearing, while protecting taxpayers at every step.”