Key members of the National Association of Insurance Commissioners (NAIC) are urging Congressional leaders to act this year on a federal solution that will ensure insurance marketplace stability and economic security as the expiration of the Terrorism Risk Insurance Act (TRIA) approaches. TRIA is set to expire on Dec. 31, 2005. The letter, addressed to Rep. Michael Oxley, chairman of the House Committee on Financial Services, and to Sen. Richard Baker, chairman of the Senate Committee on Banking, Housing and Urban Affairs, indicated state regulators’ concern that “significant market disruption may develop before TRIA’s expiration” at the end of 2005. The commercial insurance business cycle will require insurers and policyholders to make decisions this year with regard to coverage into 2006, thus bringing a need to contemplate no federal backstop for potential losses beyond 2005. The unknown status of any federal backstop will affect business decisions well before the Treasury Department’s June 2005 report to Congress. This brings the likelihood of the widespread introduction of conditional exclusions for terrorism coverage, which could cause market disruptions and damage to economic growth or overall business confidence.
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