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Terrorism insurance bill reaches awkward compromise
The hit that the insurance industry took on September 11, 2001 didn’t take days or weeks or months to absorb. American insurance, like America, is taking years to recover from that damage.
A Congress that came into power because of a war that stemmed from September 11 is currently engaged in a struggle with the office of a president who has enjoyed, quite literally, record high and low approval ratings because of the attacks of September 11.
The Terrorism Risk Insurance Act has enjoyed smooth sailing to this point, bipartisan support buoying the bill to unanimous renewal in November 2007. In essence, the law is intended to protect insurance companies from the overwhelming costs of catastrophic terrorist events by providing a federal safety net.
The question now before Congress is how far to extend the program. Specifically, the new Terrorism Risk Insurance Revision and Extension Act of 2007 seeks to provide a reservoir of government funds for group life insurance and special consideration for urban areas that are more likely targets for a terrorist attack.
In addition, the law would reduce the minimum damage value requirement from $100 million to $50 million. In other words, if a terrorist attack costs an insurer $75 million today, the insurer will be obliged to cover the cost, whereas under the new bill, federal aid would be available.
Currently, the Senate and the House of Representatives disagree on the question. The Senate voted against the new provisions of the bill which the House approved, and sent the bill back to the House. There, the majority decided to restore most of their own provisions and pass the bill again with a new number (H.R. 2761).
Critics described this second attempt by the House as a futile measure in the face of a Senate that had already trimmed the bill and a White House that had promised to veto the expanded bill.
Even the proponents of the bill gave tacit acknowledgement of the bill’s doom when the assigned a new bill number. This maneuver allows the previous bill to kick into effect, whereas another cycle through the Senate for the new bill might run past the end of the year, at which point current legislation expires.
For all intents and purposes, it appears at this point that the Senate version will become law, and the House’s last-gasp effort (2761) will die forgotten.