Agreement Reported On Terrorism Insurance

NU Online News Service, Oct. 17, 5:15 p.m.EST--A tentative agreement was reportedly reached by theWhite House and U.S. House and Senate leaders late this afternoonin support of a federal terrorism reinsurance bill.

"We are anxious to see the final details in writing, but fromwhat we understand, this is truly an unselfish compromise that putsconcern for the overall good of our nation, the economy and jobsahead of political differences," said Rodger Lawson, president ofthe Alliance of American Insurers in Downers Grove, Ill.

"I would call this an historic piece of legislation that shows aclear understanding and appreciation of the realities facing thedomestic insurance industry in the post 9/11 era," he added.

"Everyone agreed that a federal program for terrorismreinsurance was vital, but overcoming philosophical differences oncertain provisions of the competing bills was far from easy," saidDavid Farmer, senior vice president for federal affairs at theAlliance. "We appreciate the willingness of all those involved todo the right thing, and we think the final bill will be one we canall be proud to support."

Mr. Farmer said indications that the bill will includeprovisions for covering workers' compensation claims related toterrorist attacks are an important addition to the compromise.

While details of the final bill are still beingfinalized--including how bitter disputes over tort issues wereresolved--the agreement calls for a program that will provide afederal reinsurance backstop through 2005, the Alliance reported.Insurers will cover a certain percentage of losses from any futureterrorist attacks, and the federal government will provideadditional coverage for large losses.

Action is expected on the bill next week and the House, whichhas already recessed, will return for a special session nextWednesday to vote on the final bill, according to the Alliance.

Not everyone is thrilled with the news, however. The ConsumerFederation of America expressed concern that the legislation wouldleave taxpayers liable for billions in losses that the insuranceindustry could afford to repay.

CFA also charged that the legislation would likely reduceincentives for insurers to require additional security measures,and impede the development of the private terrorism insurancemarket.

"This agreement will likely do far more for the insurance fatcats than the working hard hats," said J. Robert Hunter, directorof insurance for the Washington-based CFA. "Instead of helping therelatively few businesses that can't get terror coverage, Congressis poised to give away reinsurance to a rich and politicallypowerful insurance industry."

For further details on the terrorism bill compromise, check "HotNews" at www.NationalUnderwriter.com.