Liddy disputed arguments by some Republicans that the industry should seek free market solutions to the challenges of terrorism insurance rather than count on long-term federal support. The existing government backstop expires this year.
The 2002 Terrorism Risk Insurance Act (TRIA) was passed after the Sept. 11, 2001 attacks in New York and Washington. It created a federal program of shared public and private compensation for insured commercial property and casualty losses from terrorism.
The law requires insurers to make terrorism insurance available and, in return, the U.S. government guarantees it will reimburse insurers for 90 percent of losses, above certain thresholds. It was intended to ease the costs and increase the availability of terrorism insurance for properties after prices spiked in the wake of Sept. 11.
Although it expires at the end of this year, Republican leaders in Congress have not yet moved to renew it. House Majority Leader Tom DeLay says industry should be developing private sector solutions for the long term, although the Texas Republican has indicated he could back extending the current program to ease the transition.
Some Republicans are more sympathetic to the industry's pleas for action than DeLay, but leaders in both the House and Senate say they will wait for a Treasury Department report on the TRIA due June 30 before considering a TRIA extension.
Liddy said the current law should be extended, perhaps two years, and then expanded over time to include coverage of autos and homes, pointing out that these too could be wiped out in nuclear, biological or chemical terrorist attacks.
Such attacks "could literally destroy the entire capital base of the insurance industry,'' he said.
