NEW YORK (CNNMoney.com) - Insurers can breathe a sigh of relief...for now.

With less than two weeks to go before expiration, Congress approved an extension through 2007 of the Terrorism Risk Insurance Act (TRIA) -- a backstop that guarantees the federal government will step in and cover a large percentage of future losses from a terrorist attack.

President Bush is expected to sign the extension into law in coming days.

For property-casualty policyholders in high-risk markets such as New York, the extension reduces the likelihood that insurers will either stop providing terrorism coverage for commercial property or raise rates exorbitantly to reflect additional risk. Earlier this year, many insurers placed caveats on their commercial property-casualty policies warning that if TRIA lapsed on Dec. 31, they would no longer provide terrorism insurance.

But the insurance industry hasn't gotten everything it wanted.

The current bill extends the TRIA through 2007 -- the insurance industry wants it permanent.

In addition, insurance lobbyists say, the bill is a scaled back version of the original, with the government's involvement in providing a safety net significantly curtailed.

"There is no magic potion to make terrorism risk go away," said Joseph Annotti, spokesman for the Property Casualty Insurers Association of America. "We'll go back to work immediately in 2006" to press Congress to pass a more long-term solution.

Given that a number of banks and mortgage lenders won't lend money to commercial real estate projects without terrorism coverage, if TRIA were to expire, developers in high-risk urban areas could be forced to suspend major real estate projects, said Michael Paisan, principle at Stifel Nicolaus.

Without a guarantee that TRIA is here to stay, he said both insurers and businesses would remain in a state of uncertainty.

Currently, the government is responsible for paying 90 percent of losses after one insurer or the insurance industry as a whole has absorbed a certain deductible.

For 2005, the deductible for an individual insurer would be 15 percent of the premiums it collected in the prior year.

But under the new TRIA guidelines, the deductible in 2006 jumps to 17.5 percent of premiums, and in 2007, to 20 percent.

There is also an industry-wide deductible, currently $15 billion. It climbs to $25 billion in 2006 and $27.5 billion in 2007.

And the federal government, which will also lower the percentage of losses it's responsible for, will step in only when losses from a terrorist attack exceed $50 million in 2006 – up from the original $5 million trigger. In 2007, that trigger will rise to $100 million.

"The industry is largely satisfied with the way the TRIA extension has taken shape although there is some consternation over the increase in trigger," said Robert Hartwig, chief economist at Insurance Information Institute. "But six months ago, even the possibility of extending TRIA was looking grim."

Even now critics of the bill worry that the insurance industry has become too reliant on help from the federal government at the expense of finding an solution for dealing with terrorism.

"In this short-sighted legislation, we have missed a golden opportunity to frame the TRIA program more effectively and to move to a more market-based solution," said House Financial Services Committee Chairman Michael Oxley in a statement. "When members, inevitably, are asked again to renew this temporary program, they will correctly conclude that in 2005 the can was simply kicked down the road without any real reform."

Part of the TRIA extension bill, however, does call for the President's Working Group on Financial Markets, the National Association of Insurance Commissioners, as well as representatives from the insurance industry and representatives of policy holders to provide the Senate and the House of Representatives with a report on the long-term availability and affordability of insurance for terrorism risk by Sept. 30 of 2006.

Industry players said the tone of the report could determine whether TRIA will become a more permanent fixture in the insurance industry or if lobbyists will once again be forced to wage a battle to extend it beyond 2007.

"If the nature of the report paves the way for some sort of permanent mechanism, that could help tremendously," Hartwig said. "But if its ambiguous or hostile towards the idea, then we will be in the exact same position as we were this time around."

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Insurers are also looking to change policy when it comes to natural disasters. Click here for that story.