Insurers have started warning thousands of companies that policies will be canceled in 45 days, as Congress remains deadlocked over how to help the industry survive any huge claims resulting from terrorism, according to a Nov. 13 report in The Wall Street Journal.
Insurers also are petitioning each of the states to exempt them from offering terrorism coverage after Dec. 31 if lawmakers fail to act promptly. That would pose a conundrum for the states, many of which would have to review the requests before the end of the year, when approximately 70 percent of commercial policies with terrorism provisions expire.
Insurance companies and brokers speculate that if a government backstop program isn’t in place by early December to protect insurers from terror-related claims, the already-sputtering economy could falter even more. Without an agreement, companies would have to pay more for separate terrorism coverage or accept policies that exclude it.
The Democrat-led Senate isn’t expected to introduce any legislation before lawmakers leave Capitol Hill for a Thanksgiving Day holiday break next week.
In the House, despite increasing dissent from Democrats, the GOP-controlled House Financial Services Committee passed a bill limiting insurers initially to the first $1 billion in damages from any terrorist attack, after which government funds would pay for 90 percent up to $20 billion. Insurers would eventually be required to repay the subsidy, however. The bill provides for coverage for one year, with an option to extend for two more years.
Congress also is mulling over a range of proposals lasting one to three years, calling for insurers to pick up as much as $10 billion before government aid would assist. Senate Majority Leader Tom Daschle of South Dakota has been urging the banking and commerce committees to merge their differing proposals into a single bill.
After both the House and Senate approve separate bills, they must be put together before being signed by President Bush.
The insurance industry is paying all the claims–figured to be at $40 billion to $70 billion–resulting from the Sept. 11 attacks, except for those covered by an airline-assistance package.
Topics Carriers Legislation
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