- The Washington Times - Wednesday, November 27, 2002

President Bush yesterday signed legislation that guarantees insurance companies up to $100 billion in federal reimbursements after any future terrorist attacks, a move he said would jump-start $15 billion in construction projects nationwide.

"Today we're taking action to strengthen America's economy, to build confidence with America's investors and to create jobs for America's workers," said the president, flanked by six construction workers in jeans and boots at a White House signing ceremony.

"Should terrorists strike again, we have a system in place to address financial losses and get our economy back on its feet as quickly as possible," he said.

The measure, called the Terrorism Risk Insurance Act, guarantees the federal funds for insurance companies in the three-year aftermath of an attack. The law, which critics called a taxpayer-financed gift to insurance companies, requires insurance companies to offer terrorism coverage.

The September 11 attacks on the World Trade Center and the Pentagon cost as much as $50 billion in insurance claims, prompting insurance companies to balk at offering terrorism coverage in new policies. That reluctance, Mr. Bush said, has delayed more than $15 billion in construction and real estate transactions.

"It will give people the comfort they need to go ahead with large building projects," said Larry Mirel, D.C. Department of Insurance and Securities Regulation commissioner. "The market was beginning to adjust before the legislation, but it's going to be a lot easier with the legislation in place."

But Sen. Phil Gramm, Texas Republican, and some Democrats fought the bill on the grounds it overexposed taxpayers to losses, discouraged development of a private terrorism insurance market and did nothing about punitive damage awards against those hit by terrorism.

The Consumer Federation of America said the new law makes taxpayers liable for billions of dollars in losses that the insurance industry could easily afford. It also disputed reports of construction delays due to insurance worries, saying that for "all but the highest risks, such as skyscrapers, rates are falling and banks are lending freely."

"It is shocking that Congress and the president accepted the wild claims made by insurance and real estate lobbyists at face value," said J. Robert Hunter, the group's director of insurance.

Under the new law, the government could aid the industry on terrorism-related claims that surpassed $5 million. Insurance companies would pay deductibles ranging from 7 percent to 15 percent of the premiums they received the previous year. The federal government would then cover 90 percent of everything above the deductible with the companies paying the other 10 percent.

The program would be capped at $100 billion over three years.

During dozens of campaign stops over the past few months, Mr. Bush, who received significant campaign contributions from the insurance industry in 2000, hammered Senate Democrats for holding up the legislation. Days after Republicans retook the Senate, Democrats relented and the bill passed with strong bipartisan support.

While Mr. Bush bowed to Democratic demands for unlimited punitive damages in civil lawsuits stemming from terror attacks, a provision many Republicans consider a boon to trial lawyers usually allied with Democrats, he said the new law will discourage "abusive lawsuits."

"Civil cases resulting from a terrorist attack will be combined in a single federal court. Lawyers will be prevented from shopping for courts with a reputation for outrageous awards," he said.

"It's important for our taxpayers to understand that taxpayer dollars will not be used to pay punitive damages."

The U.S. Chamber of Commerce supports the new law, saying it will improve the legal rights of plaintiffs and defendants, as well as help American workers and the economy.

Carl G. Stoecklin, president of the National Association of Professional Insurance Agents, agreed.

"The lack of available, affordable terrorism insurance has adversely affected many of our members whose clients need this coverage. This temporary backstop will provide the market stability necessary for carriers to again offer this coverage without seriously jeopardizing their solvency," he said.

Tom Ramstack contributed to this report.


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