It’ll be a close-run thing, but the US Congress is moving ponderously to addressing the need to extend the 2002 Terrorism Risk Insurance Act (TRIA) – which expires at the end of December – by two years. Insurers and other groups have been agitating for the extension all year, but the Bush administration is just as strongly opposed.

Now the House Financial Services Committee has agreed to consider the extension later this week. TRIA established a Government-financed “backstop” to cover insurers who might lose money from future major terrorist attacks in the US.

A bipartisan group of 28 governors has written to senators and congressmen urging them to “act quickly” to ensure the TRIA extension gets up. The group includes the governors of New York and California.

The Bush administration and some leading members of Congress argue the Act was always intended as a temporary fix to help the insurance industry adjust to the new risks of insuring landmark buildings and other potential targets. Without it, there would have been no cover. But they say sufficient cover is now available.

However, the administration concedes premium rises and a decline in coverage for buildings against terror attacks is likely.

New York’s Newsday yesterday quoted business leaders saying it’s unrealistic to expect private insurers alone to handle the terrorism insurance business. “They say the program’s expiration would force companies to pay much higher premiums or go without terrorism insurance.”

Lloyd’s Director of Worldwide Markets Julian James says the renewal of TRIA “is critical to the US economy, the insurance industry and its customers”.