Terror Insurance Bill Snag Remedied

Indeed, Senate Majority Whip Harry Reid, D-Nev., said on Tuesday that as far as he was concerned, terrorism insurance legislation was dead. However, the Senate leadership reached an agreement today on the conferees.

Despite Sen. Reid's frustration, industry representatives kept expressing optimism that an agreement would be reached and the long-sought legislation would get back on track.

The Democratic members of the committee are Sens. Paul Sarbanes, D-Md., Chris Dodd, D-Conn., Jack Reed, D-R.I., and Charles Schumer, D-N.Y.

Republican members are Sens. Phil Gramm, R-Texas, Dick Shelby, R-Alabama, and Mike Enzi, R-Wyo.

At press time, the House still had not appointed its conferees, but that is not seen as a major issue since the House operates under different parliamentary rules than the Senate.

Industry representatives expect the conferees and their staffs to work through the different House and Senate versions of terrorism insurance during the August recess. The conferees will have to iron out differences between two very different approaches to creating a federal role in terror insurance market.

The House approach is a federal loan program under which the Treasury would provide loans to insurance companies that suffer terrorism-related losses above a retention level. The loans would have to be repaid over a 20-year period.

The Senate approach is a quota-share program under which the Treasury would pay up to 90 percent of terrorism-related losses above a retention level, which would not have to be repaid.

The bills also differ markedly on the controversial issue of tort reform, with the House bill containing much stronger tort reform provisions than the Senate bill.