Senators passed a bill to extend the federal terrorism risk insurance program on Thursday, voting to keep government support for the industry that began with the September 11 terrorist attacks and putting pressure on House Republicans, who are divided over whether taxpayer money should be used.
A key House committee chairman rejected the Senate bill and said it will take months to settle disputes within the GOP and write his own version as Congress races to reauthorize the program before it expires on December 31.
The Senate voted 93-4 for a seven-year extension of the Terrorism Risk Insurance Act, which says the federal government will cover 85 percent of claims made in any terrorist attack where damages exceed $100 million.
Democrats and many Republicans argue a federal backstop is critical.
“For those who say let the private sector do it, we have an experiment,” said Sen. Charles E. Schumer, New York Democrat and the bill’s sponsor. “When there was no terrorism insurance after 9/11, the private sector would not offer” it.
But some House Republicans, led by House Committee on Financial Services Chairman Jeb Hensarling, say it’s time to move the federal government out of a private insurance marketplace that needs to stand on its own.
Mr. Hensarling, Texas Republican, called the Senate legislation a “status quo bill” and predicted at least several months of negotiations before anything will be passed in the House. His committee has advanced its own version, sponsored by Rep. Randy Neugebauer, Texas Republican, that would raise the $100 million trigger to $500 million, among other changes.
“We have some members who believe the reforms go too far, and we also have a host of conservatives who feel the reforms don’t go far enough,” Mr. Hensarling said.
It’s another issue where Democrats are united but the GOP is divided over the size and scope of government assistance.
Rep. Peter T. King, New York Republican, said he’d prefer a bill as close to the Senate version as possible.
“Something has to happen — they can’t let this expire,” Mr. King said. “What’s going to happen? I don’t know.”
Republican-friendly groups also have fallen on different sides of the issue. The Club for Growth and Heritage Action for America urged senators to vote against the bill, saying the Senate version does not sufficiently reduce the federal government’s role in the insurance market. The U.S. Chamber of Commerce, meanwhile, commended the passage of the Senate bill, saying the legislation will provide a measure of stability for insurance and financial markets.
But unlike debates over issues like the federal debt ceiling and the government shutdown, which pitted the body’s more conservative members against their leadership, Mr. Neugebauer and Mr. Hensarling say they have the backing of House leadership in this fight.
“The committee and leadership are locking arms on this, and we’re committed to this bill,” said a Neugebauer aide, who added they are determined to pass a bill but won’t be rushed. “We’re not in a hurry.”
Originally passed in 2002, the legislation has been renewed in 2005 and 2007 and is scheduled to expire at the end of the year.
Supporters of the Senate bill argue that it does increase the share of insured losses paid for by private insurance and that the economic consequences of a terrorist attack would be magnified if private insurers are left to their own devices right now. Any would-be government losses in the event of an attack would also be canceled out by surcharges the government imposes on certain policyholders.
The goal of the original bill was to entice insurers back into the market after many of them fled, chastened by the $30 billion in claims paid out after the 2001 attack.