The Independent Insurance Agents & Brokers of America (IIABA) reacted to the Senate’s recent approval of the terrorism insurance backstop legislation in a statement released June 18.
The final vote invoking passage was 84-14.
The legislation, S. 2600, was sponsored by Sen. Chris Dodd (D-Conn.) and co-sponsored by Senate Majority Whip Harry Reid (D-Nev.), Senate Banking Committee Chairman Paul Sarbanes (D-Md.) and Sen. Charles Schumer (D-N.Y.). The bill was brought directly to the Senate floor for debate and vote, bypassing the committee review process.
Named the Terrorism Risk Insurance Act, the new law would require insurance companies to cover damages of up to $10 billion in losses in the event of another terrorist attack, with the federal government covering 90 percent of losses greater than that amount during the first year of the possible two-year program. If approved for a second year by the Treasury secretary, the threshold would rise to $15 billion.
IIABA CEO Robert Rusbuldt said the Senate’s approval sets the stage for a conference committee and hopefully quick passage of the critical legislation.
“To be truthful, it was about time that the Senate acted on the Terrorism Risk Insurance Act,” commented Rusbuldt. “The Senate finally realized the effects caused by the lack of terrorism insurance are boiling to the surface and becoming more of a noticeable drag on the national economy with each passing day.
“The Senate’s vote should provide a much-needed boost of confidence to the business, insurance, commercial mortgage and investment communities as well as the general public, many of whom had doubts about the prospects for Senate action,” said Rusbuldt. “Many of these business sectors—large and small alike—are feeling the pinch caused by the lack of terrorism even if they are not in a major metropolitan center.
“Terrorism insurance is needed to keep our economy on the path to recovery. Without the coverage, the economy will sputter with no discernable break from the malaise caused by the terrorism insurance issue. Being able to see the proverbial light at the end of the tunnel gives everyone reason to be optimistic that legislation will be enacted into law,” added Rusbuldt.
IIABA Senior Vice President of Federal Government Affairs Maria Berthoud said that while the Senate action is welcome, it does not mean that the road to a compromise with the House will be easily achieved.
“There are stark differences between the House-passed bill, the Terrorism Risk Protection Act (H.R. 3210), and S. 2600 that will call on the statesmanship of lawmakers to resolve,” said Berthoud.
The House bill is a loan program that would lend up to $100 billion to insurance companies following a terrorist attack. The program would kick in after private insurance companies have covered the first $1 billion of losses. Any money loaned would have to be repaid by insurance companies out of earnings or premium increases, and by consumers through higher premiums. Meanwhile, S. 2600 is a pure federal backstop program.
Another thorny issue requiring resolution will be tort reform provisions, which are included in the House bill but are not a part of S. 2600, said Berthoud.
“Clearly some tort provisions will need to be included if the conference report is to be passed in the House and signed into law by President Bush,” commented Berthoud. “But there is a fine line on tort issues that congressional members and the Administration must agree upon.”
“We applaud Sen. Dodd for his solid leadership and commitment to shepherding this important national policy legislation through the Senate,” added Berthoud. “Without his tireless effort, this day would not have happened. We will work with Sen. Dodd and other House and Senate leaders to ensure that a compromise is reached that everyone can be proud of and provides real benefit to American citizens and businesses.”