With yet another drop-dead date for the Terrorism Risk Insurance Act (TRIA) at the end of the year, Congress is once again directing its attention to the proverbial question of whether private insurance companies can shoulder the burden of providing companies coverage for terrorism-related risk–that is, without the government guarantee TRIA provides to pick up most of the damages in the case of an attack.

While the availability and affordability of terrorism risk insurance has improved since the terrorist attacks on September 11, 2001, most insurance experts agree that without the renewal of TRIA, insurers and reinsurers would exit the market. “Without TRIA as a backstop,” says Jill M. Dalton, managing director for the North American property practice at Marsh & McLennan Corp, “terrorism coverage will be in short supply and be prohibitively expensive.” Dalton notes that uncertainty over TRIA could be disruptive for the normal property renewal procurement process.

Dalton has cause for optimism. The Democrat-controlled Congress has made the extension of terrorism insurance a centerpiece of its legislative efforts, and in the first set of hearings in New York this week, Democrats basically heard what they wanted to hear–that the insurance backstop provided by TRIA is vitally necessary. For Democrats right now, it is a question of whether to make the legislation permanent or extend it seven to 10 years. But there is some question as to where the White House stands. Dalton says that a recent report from a presidential working group reviewing terrorism risk insurance failed to endorse the extension. The other threat is the possibility that senators from the Gulf States might try to add a natural catastrophe insurance plan onto TRIA. “If that gets added to it,” says Dalton, “that could kill TRIA because there's not a lot of support for a national natural catastrophe plan.”