Bush Pushes U.S. Senate To Pass Terrorism Re Bill

The Presidents remarks drew a rebuttal from Sen. Bill Nelson, D-Fla., a former state insurance commissioner and one of the Democratic leaders on this issue. In a statement on the floor of the Senate, Sen. Nelson said that just before the Senate recessed at the end of 2001, Senate Majority Leader Tom Daschle, D-S.D., tried to bring up a terrorism insurance bill, but the Republican leadership objected.

Then again, on April 8, Sen. Nelson said that Sen. Harry Reid, D-Nev., the assistant majority leader, offered a unanimous consent request to bring up the legislation, but the Republican leaders again objected. "I wish we would get our facts correct about who is doing what to whom and who is trying to bring legislation out to the floor of the Senate," Sen. Nelson said.

Insurance groups, however, strongly backed the Presidents call for the legislation to advance. "Americas insurance companies stand solidly with the President in urging the Senate to act quickly and finish the task of creating a federal terrorism insurance backstop," said Robert E. Vagley, president of the Washington-based American Insurance Association.

Rodger S. Lawson, president of the Alliance of American Insurers in Downers Grove, Ill., noted a joint study just conducted by the Alliance and the Independent Insurance Agents of America showing that the lack of terrorism insurance is affecting businesses across-the-board, not just those in high-profile areas. "The Senate has the ability to end this problem, and they should resolve their differences and act," he said.

Robert A. Rusbuldt, chief executive officer with the Alexandria, Va.-based IIAA, added that the survey demonstrates there is a problem in the commercial insurance marketplace that is going to get worse without a legislative remedy.

Markham McKnight, a principal with the Baton Rouge-based brokerage firm of Wright and Percy, who chairs the government affairs committee of the Council of Insurance Agents and Brokers in Washington, praised the President for how he framed the issue. Too often, he said, people in the insurance industry focus on their own narrow issues. But by framing this insurance debate as one involving jobs and the economy, Mr. McKnight said, President Bush communicated what is at stake to a larger public in a way that most people can understand.

Monte Ward, vice president of federal affairs for the National Association of Mutual Insurance Companies in Indianapolis, added that with the ongoing threat of another attack, there is an urgency to this issue.

Anne M. Sittmann, director of public affairs for the National Association of Independent Insurers in Des Plaines, Ill., said the Presidents message that he supports the business community coalition seeking the legislation will hopefully convince the leadership to take the terrorism insurance bill to the Senate floor.

"Senators must realize that the ongoing threat to our financial system will not go away by ignoring it," added Peter Bizzozero, director of federal affairs for the Alexandria, Va.-based National Association of Professional Insurance Agents.

Consumer groups, however, questioned the need for legislation. In a joint statement, the Consumer Federation of America and Consumers Union, both based in Washington, urged President Bush to drop his support for legislation.

"The President proposes to give away insurance worth tens of billions to an industry that is flush and on the cusp of huge profit increases," said Travis Plunkett, legislative director for CFA.

While some "target risks" are having difficulty getting coverage, he said, and rates are rising for large and mid-sized businesses, there is plenty of evidence that a dynamic market for terror insurance is developing, Mr. Plunkett said.

But Iowa Insurance Commissioner Terri Vaughan, who is president of the Kansas City, Mo.-based National Association of Insurance Commissioners, said that while the markets will, over time, adjust to the new realities of terrorism risk, terrorism reinsurance is not readily available today. Where it is available, she said, it is not always affordable.

"This problem has not gone away," Ms. Vaughan said.

The federal government, she said, can remove a cloud hanging over the market through a narrowly tailored and time-limited federal law. The NAIC, Ms. Vaughan said, will continue to work with President Bush and Congress to bring about "urgently needed" federal terrorism insurance legislation.

Ms. Vaughans statement is supported by the IIAA-Alliance survey. According to the survey, 80 percent of insurance companies have excluded, or say they will exclude, terrorism coverage in the commercial policies.

Moreover, the survey found, 70 percent of the nearly 1,000 agents and brokers surveyed said their clients have declined coverage, when it is available, because it is too expensive.

The survey found that terrorism insurance is either unavailable or unaffordable in the standard market. Rather, the survey revealed, agents and brokers are placing business through excess and surplus lines markets, risk retention groups, self-insurance, and residual markets.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, April 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.