- The Washington Times - Tuesday, April 9, 2002

President Bush yesterday called on the Senate to federalize terrorism insurance, saying skyrocketing premiums and policy cancellations are stifling economic development and costing jobs.
"We in Washington must deal with it and must deal with it in a hurry, because the pace of new construction is dropping dramatically in America," Mr. Bush told union hardhats in Washington.
"Banks and investors and others will not finance construction projects that do not have terrorism insurance," he said in the Eisenhower Executive Office Building, next to the White House. "Nonresidence construction is down 3 percent compared to January of 2002 and down 17 percent compared to February of 2001."
The Republican-controlled House passed terrorism insurance legislation Nov. 15, but it remains stalled in the Democrat-controlled Senate. If the measure becomes law, the federal government would reimburse businesses for 90 percent of any losses after the first $10 billion from acts of terrorism.
Insurance companies would handle the remaining 10 percent. Damages from the terrorist attacks on New York and Washington cost the firms $40 billion, an industry record.
White House Press Secretary Ari Fleischer said Senate Democrats are blocking the legislation because they are beholden to trial lawyers, who oppose tort-reform aspects of the bill.
"The problem is that the Senate leadership won't schedule a vote because they suspect there are enough votes on a bipartisan basis to pass a strong bill," Mr. Fleischer said. "The trial lawyers have a lot of say with the leadership of the Senate, and that's what's holding this up."
He added: "You cannot have terrorism insurance passed without legal reform. It's an integral part of having a system that has insurance protections in place."
Carlton Carl, spokesman for the Association of Trial Lawyers of America, denied that Senate Democrats are beholden to his organization.
He said the association has no objection to the federalization of terrorism insurance but that the bill would also "immunize near-criminal behavior" by companies whose negligence might lead to a terrorist attack.
For example, if a pipeline company negligently hired a terrorist who blew up a pipeline, the bill would prevent lawsuits seeking punitive damages, Mr. Carl said. It would "grant future immunity to unknown defendants for unknown acts," he said.
A senior administration official said that hypothetical situation was not apt.
"The president specifically said that the limits on punitive damages should only apply to legitimate American businesses, not to anyone who's actually engaged in terrorist activities," said the official, who spoke on the condition of anonymity.
Ranit Schmelzer, spokeswoman for Senate Majority Leader Tom Daschle, said Republicans blocked a Democratic version of the bill yesterday afternoon. Democrats also blocked a GOP version.
"Ari can say whatever he wants, but the facts speak for themselves," she said. "Senate Democrats tried to pass the terrorism insurance bill, and the Republicans objected and blocked it."
The Washington Times reported last week that the Liberty Mutual Group of Boston abruptly canceled its insurance policy for the International Economic Development Council, which is located about a block from the White House.
A note on the policy read, "Non-renewed due to catastrophic exposure."
Law firms, restaurants and other companies near the White House have been told their insurance will soon be canceled or will grow dramatically more expensive. Insurers are worried about a terrorist attack on the White House, which was evacuated September 11 amid reports that it was being targeted by one of the four hijacked planes.
In New York City, the Metropolitan Transportation Authority was able to secure only $150 million in terrorism coverage for its bridges, subways and tunnels, which are worth ten times that amount.
The problem has spread far beyond New York and Washington.
The Miami Dolphins and the New York Giants recently became the latest National Football League teams to lose terrorism coverage. And insurance premiums for the Mall of America near Minneapolis have increased tenfold.
White House officials said that these dramatic changes in the insurance industry are having a ripple effect on the broader economy.
In Nevada, for example, developers unable to secure terrorism insurance have suspended work on a $2 billion resort that would provide jobs for 16,000 people. And administrators of pension plans for teachers and other workers are dipping into retirement funds to pay rising insurance premiums on buildings they own.
"We better find terrorism insurance, because without it, it would be a catastrophic problem if there's another attack," Mr. Bush warned. "It'll make it really hard for our economy to recover a second time if there's an attack without adequate terrorism insurance."


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