Senate Panel Passes Terror Insurance Bill

By Bill Swindell
CongressDaily

WASHINGTON — The U.S. Senate Banking Committee yesterday approved legislation that would reauthorize the federal government's terrorism risk insurance program, with the added boost of picking up the support of the White House (see GSN, Oct. 16).

The panel voted 20-1 for the bill, which would reauthorize the program for seven years.  Unlike a House-passed measure, though, it does not include language that would require carriers to make available coverage for a nuclear, biological, chemical or radiological attack.  Committee Chairman Christopher Dodd (D-Conn.) said he wants to bring the bill quickly to the Senate floor, perhaps as early as next week.  The program expires at year's end.

Dodd's bill picked up key support yesterday from Treasury Secretary Henry Paulson, who wrote to him saying the administration would not oppose the Senate bill — unlike its veto threat issued against the House-passed measure.

The administration would like a shorter extension and an increase on carrier retentions, but threw its weight behind the Senate measure as the best deal it could get in a Democratic-controlled chamber and to give it an advantage in conference negotiations against a House bill that would vastly expand the program and reauthorize it for 15 years.

"Should the amendments be adopted that move the current [Senate] bill further from our key elements, the president's senior advisors would recommend that he veto the bill," Paulson wrote.

Lawmakers will have to sort out many other differences in conference.  The Senate bill draft would keep the program's trigger at its current level of $100 million; the House bill lowered it to $50 million.  The House bill also added group life coverage to the program, a priority for the life insurance industry; the Senate bill did not.  Both bills would expand coverage for domestic acts of terrorism.

One issue that could be pivotal in negotiations would be whether to allow the program to decrease deductibles for areas that have previously suffered a terrorist attack.  The issue is important to the New York delegation, which contends such language is needed to aid in rebuilding the World Trade Center site.  The House bill would reset the deductible for such areas down 5 percent from the prior year's insured losses if there is a nuclear, chemical, biological or radiological attack.  The current deductible is 20 percent and would be retained in both bills.  But Dodd did not include the provision in his bill, only authorizing a Government Accountability Office study to determine if businesses in certain high-risk areas such as Manhattan have problems in securing coverage.

Senator Charles Schumer (D-N.Y.) said he would push for the House language as the bill advances.

"Twenty percent is a huge amount of money that would bankrupt just about any insurance company, including the largest.  So they stay away," Schumer said.  "The reset provision is vital for the rebuilding of ground zero."

Senator Wayne Allard (R-Colo.) was the only member to oppose the bill.  Allard said when the program was created in the aftermath of the Sept. 11, 2001, terrorist attacks, the insurance industry told him it would be temporary, but he now feels that it has become a permanent fixture even with limited reauthorizations.

"Unless they [the insurance industry] are forced to come up with solutions, they will simply continue to rely on the federal government," Allard said.

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