President Bush on Thursday signed a two-year extension of a post-9/11 law providing federal insurance backup for catastrophic losses sustained in a terrorist attack.
The Terrorism Risk Insurance Act expires at the end of the year. Congress has been lobbied heavily by business and insurance groups to keep the program alive. They said builders and investors wouldn't be able to get the terrorism insurance needed to initiate construction projects without it.
The White House pushed for a provision that scales back federal guarantees with the objective of eventually ending government participation in the terrorism insurance market.
The measure would increase the amount of property and casualty losses that trigger federal payments from $5 million to $50 million in 2006 and $100 million in 2007. It would raise industry deductibles and co-payments and increase the financial stake of insurers.
The aggregate retention level, the amount the insurance industry must pay in a year, would rise from the current $15 billion to $25 billion in 2006 and $27.5 billion in 2007.
