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U.S. Response: Congress Debates Federal Aid to Insurance Companies Republicans and Democrats in the U.S. House of Representatives agreed yesterday on a framework for providing financial assistance to the insurance industry (see GSN, Oct. 26) but left several issues unresolved. The House Financial Services Committee adopted a bill in which private insurers would pay a deductible of $1 billion on claims resulting from terrorist attacks, and the government would cover about 90 percent of claims thereafter. Committee members said the deductible could increase after negotiations before the bill goes to a full House vote. Additionally, insurers would have to repay the government according to a schedule included in the plan. Meanwhile, the Senate Banking Committee has been working on a competing proposal that features a $10 billion deductible and 90 percent government coverage thereafter but would not require insurers to repay the government’s money. Lawmakers also were divided yesterday over whether to protect insurers from punitive-damage claims and whether insurers should get tax breaks for paying terrorism claims (Jackie Spinner, Washington Post, Nov. 8). Congress members agreed they should move quickly to pass legislation to assist the insurance industry, according to the Associated Press. Insurance companies have said they could pay the claims resulting from the Sept. 11 terrorist attacks on the United States but said without government assistance they would face a crisis in the next year. Reinsurance companies, which insure insurance companies, have said they would drastically increase rates or not renew terrorism-related insurance after Dec. 31, when most insurance policies expire. Lawmakers have expressed serious concern that crisis in the insurance sector would damage the economy in several areas, such as construction. “The consequences could be catastrophic for the economy next year,” said Representative Paul Kanjorksi (D-Pa.) (Jesse Holland, Associated Press/RealCities.com, Nov. 8).
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