Terrorism Bill Stalled, But Not Dead Yet

By Steven Brostoff, Washington Editor

NU Online News Service, May 23, 12:18 p.m. EST,Washington?Insurance groups are disappointed, but notdiscouraged, over the failure of Congress to enact a federalbackstop for the terrorism insurance market prior to the MemorialDay recess.

"It's been disappointing and frustrating to see the pace ofnegotiations," said Joel Wood, senior vice president of governmentaffairs for the Washington-based Council of Insurance Agents andBrokers. "But the bright side is that unlike the energy bill or thebankruptcy bill or the farm bill, there is not a multiplicity ofissues in controversy."

All that is required to get the legislation enacted, he said, isa bit of will power.

Many people looked to the Memorial Day recess as a kind ofpsychological deadline for the legislation. After that date, thethought was that Congress would be so tied up with other issues andso focused on the November elections that it would be hard to movea terrorism insurance bill.

But David Farmer, senior vice president of federal affairs forthe Downers Grove, Ill.-based Alliance of American Insurers, saidthat artificial deadlines rarely apply to the Senate, where thelegislation has been stalled.

"The old saying, ?It ain't over till it's over,' applies," Mr.Farmer said. "The only deadline that matters is when the 107thCongress adjourns."

Carl Parks, senior vice president of federal governmentrelations for the National Association of Independent Insurers inDes Plaines, Ill., agreed. He acknowledged that time is short.

When the Senate returns from the Memorial Day recess on June 3,Mr. Parks said, there essentially will be only 13 weeks left in thesession. Moreover, he said, during most of those weeks, the Senatewill only meet for three days.

And in that time frame, Mr. Parks said, the Senate will have todeal with a variety of "must do" bills, including 13 appropriationsbills, welfare reform, and possibly a prescription drug benefitunder Medicare.

Nonetheless, Mr. Parks said, there is evidence of movement. Theinsurance industry, developers, labor unions, the White House andothers are making a strong case about the economic consequences offailing to enact a bill, he added.

Julie Rochman, senior vice president of public affairs for theWashington-based American Insurance Association, noted that theterrorism bill is not like a traditional bill, which has to gothrough the committee process in the Senate. That is not the casewith terrorism insurance legislation, she said, which will go rightto the floor once an agreement is worked out.

Moreover, she noted that Senate Majority Leader Tom Daschle,D-S.D., just last week reiterated his intention to bring a bill tothe floor. "This bill will still happen," she said.

Everyone agrees that the main bone of contention is whether toinclude tort reform to restrict lawsuits. Neither the proponentsnor the opponents of tort reform have shown any willingness tocompromise.

"It's like a game of chicken," said Monte Ward, vice presidentof federal affairs for the National Association of Mutual InsuranceCompanies in Indianapolis. "I don't know that either side iswilling to give up now."

But in addition to tort reform, there might still be somelingering questions among some senators about the need for afederal role at all.

Mr. Farmer said there is some continued confusion about thecapacity of the industry and the amount of new capital coming intothe market. Some seem to believe the market is responding, Mr.Farmer said, but the reality is dramatically different. Theindustry, he said, is making an intense effort to demonstrate theimplications of failing to enact a bill.

Mr. Wood agreed, noting the recent determination by the New Yorkinsurance department, that while an act of terrorism may beexcluded from insurance policies, a fire following the terroristact is not. Moreover, he said, most jurisdictions seem to befollowing the New York department's interpretation.

He said he is now hearing from the brokerage community thatthere is a burgeoning availability crisis in the market for largerproperty risks. This is why a federal backstop is so necessary, Mr.Wood said.

Ms. Rochman added that the country is being told every day thatthere is a 100 percent chance of another attack.

She remains confident the bill will get done despite the passingof Memorial Day. "I think they can get this teed up right when theyget back," she said.