- The Washington Times - Monday, November 12, 2001

Although the September 11 terrorist attacks certainly made victims of all Americans to some extent, excessive declarations of victimization seem decidedly un-American. That is why the interminable procession of industry lobbyists seeking government compensation for their current financial ailments is counterproductive, not to mention unseemly. With this in mind, Congress should carefully consider what kind of support it will lend the insurance industry one of the many in line for taxpayer-financed aid.
Curiously, some of the sectors that most benefited, or are likely to benefit, from government handouts are also generally viewed with considerable skepticism by consumers. The insurance industry safely falls into that category. To be sure, this industry provides a crucial service that the economy as a whole depends on because, if companies can't find insurance against terrorist attacks, lenders won't fund development plans and could even foreclose on existing projects in real estate, infrastructure, etc.
To hear insurance companies tell it, they can't provide plans for a threat as unknowable as terrorism and have asked the government to help them pay for their liability. While the government does have a role in backing the company's ability to pay claims, the industry is overstating its case. An internal memo from a trade group for members of British insurance company Lloyd's of London, one of the main insurance companies affected by the September 11 attacks, best illustrates this exaggerated plea. Since the attacks, premiums for disaster insurance "have shot up to a level where very large profits are possible," said the memo. Rates have risen by an average of 40 percent since the attacks, and the group said it had taken measures to help members "take maximum advantage" of this condition. The memo, then, not only demonstrates a gross insensitivity to the September 11 calamity, but it also illustrates that insurance companies are experiencing a much rosier scenario.
Meanwhile, the Senate is pondering legislation co-sponsored by Sens. Phil Gramm and Paul Sarbanes that would require the federal government to assume the costs of terrorist attacks between $10 billion and $100 billion for two years. Although the bill has the strong endorsement of Treasury Secretary Paul O'Neill, it glaringly disregards the taxpayers' potential fiscal burden.
A bill passed by the House Financial Services Committee seems to make more sense. Under the House plan, the government would lend the insurance industry 90 percent of the money it needs to pay claims in 2002 if an attack generates industry-wide losses higher than $1 billion, or if losses of $100 million generate sufficient hardships on a particular company. But the government would not shoulder liability. The House plan is a reasonable one, since the insurance industry hasn't been victimized by September 11. Indeed, while the insurance industry's risk quotient has increased, so has its profit potential.

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