Fears of terrorism that faded in the years since 9/11 have been reignited by Boston. | REUTERS The terror insurance debate

The Boston Marathon bombings seem certain to influence the debate on Capitol Hill on issues from homeland security to immigration reform.

Already, the insurance industry and its congressional allies are saying the tragedy gives a greater sense of urgency to their cause: extending the terrorism risk insurance program put in place after Sept. 11.


“It is a wake-up call to members of Congress that terrorism is still alive,” said Bob Rusbuldt, president of Independent Insurance Agents & Brokers of America, whose members hit the Hill Thursday as part of the group’s legislative conference. “It doesn’t matter whether it’s domestic terrorism or international terrorism. Terrorism is terrorism.”

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The industry’s lobbying stance serves as an example of how the fears of terrorism that faded in the years since the attacks on Manhattan and the Pentagon have been reignited and will affect policy debates in Washington.

The program was put in place in 2002 after the Sept. 11 attacks to have a federal backstop for insurance industry losses that result from devastating strikes. Without the government playing a role, the fear was terrorism insurance would be too costly to offer and that major building and infrastructure projects that need it would be stalled.

It expires at the end of 2014, but the industry and lawmakers from New York and elsewhere have expressed worries that without a concerted push for action, the issue will fall off the congressional radar.

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Now, the Boston bombing has given renewed relevancy to the issue.

“2014 is not that far away,” Sen. Mark Warner (D-Va.) said Thursday at the insurance conference, arguing for a 10-year reauthorization, “particularly in light of the tragedy that took place earlier this week.”

The lobbying push faces skepticism.

To get anywhere, supporters of the program will have to persuade conservative lawmakers to get behind a government backstop they never fully supported.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) made clear this week that the program is not an immediate priority for his panel.

“Last I looked, we’ve got a program that’s authorized through the end of 2014,” he said in an interview Thursday after addressing the same insurance agents conference where Warner spoke. “It’s an important issue our committee will be dealing with, but right now, we’re dealing with our sustainable housing policies — in due time.”

The lobbying won’t be isolated to the insurance industry. The program is a major issue for real estate interests and other business groups, which have registered to lobby as the Coalition to Insure Against Terrorism.

The program’s backers argue that the insurance industry still can’t plan for terror risks like a marathon bombing the same way it can plan for natural disasters like hurricanes.

Without the government willing to cover some of the losses from an attack, they argue, insurers won’t offer the policies. In turn, new buildings that need the insurance might not be constructed; the economy will take a hit; and in the event that there is a devastating terror attack, political pressure will result in the government footing the entire bill.

So far, the Boston attacks have not triggered the backstop, and they might not at all. By comparison, the fertilizer plant explosion in Texas last week may end up causing a larger amount of property damage in terms of dollars.

Under the terror program, the insurance industry must hit $100 million in losses over a year before the government starts paying. But even before that threshold is hit, the treasury secretary must certify an act of terrorism in cooperation with the secretary of state and the attorney general. The threshold for an attack to be considered is $5 million.

Conservatives continue to be skeptical of having the government involved in the insurance market. That dynamic was on display during last year’s debate on the National Flood Insurance Program, which Congress reauthorized last year and then gave more borrowing authority after Hurricane Sandy.

“The sense is no one has said, ‘Hell no, over my dead body,’” American Insurance Association President Leigh Ann Pusey said. “What you’re getting is an understandable restraint.”

Conservatives will most likely try to pare back the program, which was renewed in 2005 and 2007, even if they get behind a reauthorization.

“One of the things we need to do is insulate the American taxpayer as much as possible,” House Financial Services insurance subcommittee Chairman Randy Neugebauer said in an interview. “Insurance companies are in the insurance business, and we need to make sure that we keep the government out of the insurance business as much as possible.”

A Republican on Hensarling’s committee has already taken the lead in pushing to keep the government backstop in place.

Rep. Michael Grimm introduced a bill with fellow New York Rep. Carolyn Maloney, a Democrat, in February that would extend the terrorism insurance law for five years.

Their lead underscores the importance of the program to lawmakers representing major metropolitan areas, though supporters argue that the backstop is also critical for infrastructure and sports stadiums across the country.

“Coming from New York and living through 9/11, I don’t need a Boston,” Grimm said in an interview. “Regardless of whether another tragedy like Boston happens or not, the threat will always be there.”

Grimm said the focus this year is to “set the table” before a floor vote early next year, adding that “not everyone” is going to be supportive.

“Not having [the Terrorism Risk Insurance Act] puts the entire burden on taxpayers, and that’s not fair,” Grimm said. “We can mitigate that by preparing ahead of time, knowing we live in a dangerous world. TRIA is a preventive measure, and it’s being fiscally responsible.”

Neugebauer, who said he’s in “listening mode” in preparation for deciding whether to support extending the bill or let it expire, wants to have a hearing before August but said it might take longer.

Some in the industry are bracing for a last-minute reauthorization, regardless of what the Boston attack does to the debate.

In the meantime, insurers are already discussing what to do with insurance policies that run past the end of 2014, Property Casualty Insurers Association of America senior counsel Robert Woody said. Insurers might introduce “conditional exclusions” that offer coverage until the expiration date but not after.

“It’s already impacting policies to some degree,” said Ben Walter, chief executive of Hiscox USA, a specialty insurer that offers terror insurance outside of the federal program. “My personal view is people are assuming it will all be fine and just getting on with it, but I don’t place bets on Congress anymore.”