The Alliance of American Insurers called last week’s appointment of U.S. Senate conferees for the terrorism insurance bill a great stride toward ultimate passage of the legislation.
“We’re very encouraged that the Senate conferees have been appointed,” David Farmer, Alliance senior vice president of federal affairs, said. “After Congress returns, we believe the conference committee will be able to successfully complete their work and bring a bill back to Congress for a vote by mid- September. There clearly is new energy being brought to the process, and we applaud members of both parties.”
The Senate conferees are Democrats Paul Sarbanes (Md.), Christopher Dodd (Conn.), Jack Reed (R.I.) and Charles Schumer (N.Y.), and Republicans Phil Gramm (Texas), Richard Shelby (Ala.) and Michael Enzi (Wyo.).
The Senate bill (S 2600), passed this June, provides in 2002 for an 80/20 reinsurance arrangement after an individual insurer’s deductible has been met and a 90/10 arrangement after aggregate losses of $10 billion have been incurred. The Treasury Secretary could extend the program until the end of 2003. In that year, the initial threshold for government assistance would increase to $15 billion. The bill also would require civil lawsuits to be brought in federal court, with existing state law to apply.
The House passed a terrorism insurance bill (HR 3210) in the fall of 2001. It authorized loans to the P/C industry to cover 90 percent of future terrorism- related losses, after a loss of either $1 billion to the industry or individual company losses that exceed 10 percent of surplus and 10 percent of written premium, with a minimum retention of $5 million.
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