- The Washington Times - Friday, October 4, 2002

This week, President Bush called on Congress to pass terrorism-insurance legislation by today. At a Cabinet Room meeting of House-Senate negotiators, Mr. Bush said more than $15.5 billion in construction projects, that would create about 300,000 jobs, are on hold, due to builders' difficulties in getting terrorism coverage. "This is a way for us to work together to put people back to work here in America," Mr. Bush said.

Government backing of terrorism insurance would lend more support to the general economy than the insurance sector, since insurers have shown little interest in offering terrorism coverage. According to a report by the Joint Economic Committee, published in May, about half of U.S. businesses have no terrorism insurance. By providing some kind of governmental support for this type of insurance, Washington would prompt the industry to enter a market it is currently avoiding.

The House and Senate have passed differing versions of terrorism insurance bills. While the House bill would provide loans to the industry in the event of a large-scale attack, the Senate's would cover most of the industry's losses. Lawmakers appear prepared to compromise on a final bill, when it comes to what kind of support the government should give, but are deadlocked on tort-reform issues. Mr. Bush and Republican legislators wisely maintain that, if taxpayers will be footing the bill for terrorism liabilities, they shouldn't have to pay for spurious lawsuits. Moreover, it is patently absurd to tell a small business that is blown up by terrorists that it should be liable to lawsuits from customers or employees. But Democrats have dug in their heels on limits to terrorism-related lawsuits. This is perhaps not surprising, since lawyers and law firms directed 70 percent of their campaign contributions, or $79.8 million, to Democrats during the 2000 election cycle.

Despite the record $40 billion loss that the insurance industry incurred from the September 11 terrorist attacks, the industry is doing quite well a year later and has been able to raise premiums on a variety of policies. But insurers are uninterested, for the most part, in providing coverage against a risk that isn't quantifiable. Once the government provides some support, insurers would be able to more effectively predict their potential terrorism-related losses and start providing terrorism plans.

Given the current economic fragility, lawmakers should strike an agreement on a bill as soon as possible one that benefits Americans and their economy. But given the stranglehold that the trial lawyers have on the Democrats, don't bet on it.

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