Terrorism Insurance Bill Faces Plenty Of Hurdles

In addition, while H.R. 3210 has strict tort reform measures, S. 2600 has fewer reforms.

But despite these differences, Mr. Karr said he believes an agreement can be reached. This issue, he said, is important to the White House, the House of Representatives and the Senate. "There is no reason to believe that at the end of the day, it cant get done," Mr. Karr added.

Julie Gackenbach, director of federal relations for the National Association of Independent Insurers in Des Plaines, Ill., agreed. "There is room to broker a deal," she said.

The differences between the two bills will be worked out by a House-Senate Conference Committee, which at press time had not yet been appointed.

"Speed is of the essence," Ms. Gackenbach said. "We have to start the conference as soon as possible."

She added that while several ideas have been floated over the past few months on ways to combine the two bills–including one suggestion of a three-tiered program in which the first tier would be an industry retention level, the second a loan program, and the third a quota shareshe believes the conferees with start with a clean slate.

In addition to reconciling the Houses loan program with the Senates quota-share proposal, the conferees will have to resolve the differences over tort reform.

Indeed, President George W. Bush, in praising the Senates action in a statement, cited tort reform as one of his chief concerns. "The final terrorism package must include reasonable litigation procedures so that Americans who are victimized by terrorism do not also fall victim to predatory lawsuits and punitive damages," the President said.

The President did not outline the minimum tort reforms he believes are necessary, but Democrats in the Senate have signaled their willingness to deal with the White House.

In a statement on the floor of the Senate, Sen. Chris Dodd, D-Conn., who led the effort to pass S. 2600, said that the conference committees bill will contain more tort reform than is in S. 2600.

The primary tort reform in S. 2600 is to require that all civil lawsuits arising out of a terrorist attack be brought in a single federal court. By contrast, H.R. 3210 bars punitive damages against American businesses that are sued following an attack, and places limits on fees paid to plaintiffs lawyers.

But despite these differences, industry representatives remain encouraged, particularly in light of the lopsided Senate vote.

"We believe that this vote reflects a widespread understanding in the Senate of the serious implications to our economy," said Rodger Lawson, president of the Downers Grove, Ill.-based Alliance of American Insurers.

Monte Ward, vice president of federal affairs for the National Association of Mutual Insurance Companies in Indianapolis, said that NAMIC is "very pleased that the Senate has voted to protect the American economy in the event of a future terrorist attack."

Some consumer groups criticized the Senates action. In a joint statement, the Consumer Federation of America and Consumers Union, both based in Washington, called the Senate bill an "insurance industry giveaway."

"It is scandalous to require taxpayers to give away insurance to an industry that is in extremely good financial condition after Sept. 11," said J. Robert Hunter, CFAs director of insurance. "At the very least, this bill should require insurers to pay back any financial assistance they receive, as the House bill does."

But Michael Phillipus, vice president of communications and external affairs for the New York-based Risk and Insurance Management Society, which represents many of the largest consumers of insurance, praised the legislation.

The legislation, Mr. Phillipus said, is not a bailout of the insurance industry. Rather, he said, it is aimed at protecting and preserving the U.S. economy in the event of another major terrorist attack.

He called for the conference committee to work quickly. "Lets not waste a single day, because that is one more day that thousands of U.S. companies are going without terrorism insurance," Mr. Phillipus said.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 24, 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.