U.S. terrorism insurance legislation makes progress

U.S. president George Bush called on Congress to act swiftly in proclaiming a single terrorism insurance bill. This call came on the heels of the Senate’s unanimous approval of the Terrorism Insurance Act (S 2600) this past month. The Republican-led House approved a terrorism insurance bill in November which was stalled by the Democrats.

With the Senate (holding a Democratic majority) having passed S 2600, both pieces of legislation are now subject to a Congressional conference committee to hone a single federal bill. “The House passed one [piece of legislation]. The Senate passed one. They need to get it to conference…And they need to get it to my desk as quickly as possible…the bill has got to make sure that insurance companies remain engaged in covering terrorism losses, that the government will help, but not help all the way,” Bush says.

Bush emphasized that passing legislation to ensure businesses have access to terrorism cover had become critical. He notes that, since the tragic events of September 11, lenders have turned down billions of dollars in construction business due terrorism insurance not being available.

From a Canadian perspective, the Insurance Bureau of Canada’s (IBC) president Stan Griffin does not believe that the U.S. development will prompt faster action by the federal authorities to present their own version of a terrorism reinsurance bill. “I doubt the Canadian government will do anything until there is solid evidence that there is a bill in place in the U.S.”

Griffin also points out that the recent ministry portfolio changes in the Liberal government, specifically affecting the Department of Finance, will further temper any action on the terrorism insurance issue. Plus, with the parliament shutdown for the summer, “then there is no practical way that a bill could be introduced,” he notes. “I doubt at this point that much will happen in the next few months in terms of a federal response to terrorism reinsurance.”

Several U.S. risk and insurance industry bodies have responded positively to the Senate’s approval of S 2600. Commenting on the future course for both the Senate and House terrorism insurance pieces of legislation, the Risk and Insurance Management Society Inc. (RIMS) vice president of communications & external affairs says, “we are hopeful that the [Congress] conference committee will quickly complete the work that it has to do and will send this legislation to president Bush for his signature”. The National Association of Independent Insurers (NAII) also commended the Senate for its action while the Council of Insurance Agents and Brokers’ (CIAB) president Ken Crerar notes, “the council commends the Senate for completing the hard work needed to craft legislation taking us one step closer to a federal backstop for insurance coverage of terrorist acts”.