American insurers say the US Senate’s move to introduce legislation to extend the Terrorism Risk Insurance Act (TRIA) until 2007 will act as an economic safety net for consumers.

The legislation would extend TRIA for two years beyond the 31 December 2004 expiration date. There are two other bills pending that would also extend TRIA, but they differ slightly in detail.

If passed, the legislation dubbed the Terrorism Insurance Backstop Extension Act would require participating insurers to make terrorism coverage available under terms similar to regular insurance cover.

The act would also require the US Treasury to determine whether group life insurance is covered by TRIA. The Government would need to come up with feasible solutions on the availability and affordability of independent terror cover.

The American Insurance Association (AIA), which believes the bill will give muscle to the campaign to extend TRIA, says it is crucial that Congress extend the act this year.

AIA Senior Vice President of Government Affairs Leigh Ann Pusey said: “The main reason to extend TRIA is that annual insurance policies written in 2005 – which are negotiated as early as this [autumn] – will overlap TRIA’s expiration. This overlap will cause tremendous market uncertainty and leave policyholders and insurers exposed to… terrorist attacks.”