The U.S. Senate is close to extending an insurance program Sen. Charles Schumer said is vital to New York’s post-9/11 resurgence and economic development in cities across the country.
Schumer, D-N.Y., introduced a bill on April 10 that would extend the government-backed terrorism-risk insurance program through 2021.
The program, created in 2002 and reauthorized in 2005 and 2007, gives private insurers access to billions of government dollars to cover payouts in the event of another terror attack.
Without that backing, Schumer said, insurance carriers would not extend coverage to potential terror targets, such as tall buildings in major cities, stadiums, malls and airports.
“No private insurer will insure against terrorism and many investors want to be assured that if, God forbid another terror attack occurred, they will not lose their whole investment,” Schumer said on April 10 in a telephone interview.
Schumer said he reached a compromise on the extension after months of negotiation with Republicans, who won concessions on the amount private insurers would be required to pay back to the government.
The proposed legislation would boost the insurers’ initial payout obligation to 20 percent from 15 percent and forces them to return up to $37.5 billion, instead of the current $27.5 million, to government backers.
Three Republicans, including Mark Kirk, of Illinois, and a pair of Democrats co-sponsored the bill.
“Chicagoans believe it is our birthright to stand in the shadows of the tallest buildings in the world,” Kirk said in a statement. The program, he said, “protects the economy from terrorist harm while protecting taxpayers from financial risk.”
Schumer says he expects passage in the Senate. He is confident the measure will win approval in the Republican-controlled House.
The Heritage Foundation, a conservative think tank, last month called for the end to the program, saying it provides for “an unnecessary bailout of the insurance industry” at taxpayer expense.
Schumer said on April 10 if the program is not extended, the cost of building construction would escalate, hampering or altogether ending New York City’s building boom. He compared the government’s backing to its role in providing flood insurance for homeowners whose private insurers won’t take the risk.
Some projects, he said, were “put on hold” because of uncertainty over the future of the program.
“The larger the city, the more prominent the city, the more likely it is to be a target and the more they will benefit — New York most of all,” Schumer said.
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