In a Statement of Administration Policy, the White House said the bill violates all three elements that it believes should be in a reauthorization: no expansion of the program; that private-sector retentions should be increased; and that renewal should be temporary and short-term. The bill is expected to pass the House later this week.
The White House argued that the program, which was constructed in the aftermath of the Sept. 11, 2001, terrorist attacks, should be phased out in the near future.
The House bill had originally extended the program, which expires at year's end, for 10 years. But Homeland Security ranking member Peter King, R-N.Y., successfully pushed an amendment in the Financial Services Committee markup to extend it an additional five years. King argued his language brings more stability to the real estate and construction industry so it can move forward with large-scale building projects.
The administration also opposes inclusion of group life coverage and coverage for acts of domestic terrorism in the renewal. "Adding these insurance coverages to the federal reinsurance backstop sends the wrong signal to the marketplace, which instead should be encouraged to find new ways to diversify the risks of doing business," the White House said.
The administration also opposed a provision that would require insurance companies to make available coverage for a nuclear, biological, chemical or radiological attack. It argued that the language would have a "negative impact" on other forms of terrorism risk insurance. Small carriers oppose that provision, but it is supported by large real estate holding companies.
Finally, the administration attacked the bill over its cost to the government, which the Congressional Budget Office has estimated at $3.7 billion over a five-period period and $10.4 billion over a 10-year period. House Democratic leaders intend to use language or amendment to circumvent pay/go budget rules.
"The administration strongly opposes the use of any such gimmicks to mask the true cost of the legislation and circumvent budget rules," it said.