Congress Puts Us All At Risk
Will it really take another terrorist attack to break the political gridlock in Congress and get a federal terrorism reinsurance backstop in place? Unless the political dynamics change in a hurry, that could very well be the case.
The logjam is in the Senate, where tort reform disputes have tied up a bill to provide quota-share reinsurance. The Senate proposal is very different from the one passed by the House late last year, which establishes a loan program. Since insurers need reinsurance, not loan guarantees, to start writing terrorism coverage again, the House bill wont do the trick, but at least they are poised to negotiate a compromise on a final measure everyone can live with.
The Senate "isn"t missing the forest for the trees, theyre missing the forest for the leaves on the trees," lamented Robert Gordon, senior counsel to the House Committee on Financial Services, at a recent meeting of the Casualty Actuarial Society.
Some of the largest employers in New York, including AIG and Citigroup, in desperation have asked President Bush to support a federal backstop for terrorism losses in workers comp, which should not be affected by tort reform concerns. But limiting the bill to one line is risky at a time when the government says another terrorism attack is inevitable, and could happen at any moment.
Thus, insurers and risk managers should keep the heat on Washington to get the whole job done, and fast.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 3, 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.
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