The US National Association of Insurance Commissioners (NAIC) wants Congress to adopt a two-year extension of the Terrorism Risk Insurance Act (TRIA).

“A short-term, two-year extension of the TRIA program should give the industry the appropriate financial back up it needs in order to avoid negative economic consequences and instability,” said NAIC President Ernst Csiszar.

The US Treasury Department has said it will extend the “make available” provision of the TRIA – which requires insurers to make terrorism coverage available – through next year.

But the NAIC says the next step toward continued stability, strengthened capacity and consumer protection, is for Congress to pass legislation extending the TRIA program to the end of 2007.

“We have received filings from insurers that indicate coverage limitations that were in effect prior to TRIA would be reinstated, should Congress not act to extend TRIA,” said NAIC working group leader Donna Lee Williams. “ Congress needs to act on this, and we hope the NAIC resolution will urge them to do so,”

The NAIC says there are two major types of insurance vulnerable to risk concentration problems in the event of a large terrorist attack: workers’ compensation and group life coverage.

To make matters even more complicated, there is no statutory requirement for group life that prohibits an insurer from limiting available coverage for acts of terrorism in some form. Nor is there sufficient group life reinsurance to cover a catastrophic terrorism loss.