On Friday, the House passed legislation that would bail out the insurance industry in claims arising from futureterrorism. The bill, which received the tentative backing of the White House, would allow the government to cobbletogether about $100 billion to cover future losses for insurance companies.
Ultimately, if the government covers the industry’s costs, taxpayers would bear the brunt of the burden. The Houseplan would require insurers to shoulder the first $1 billion in losses arising from a terrorist strike, while thegovernment would lend money to pay 90 percent of any additional claims. The loans would be repaid by the industry andits policyholders. Reinsurance companies — which insure insurance companies — have indicated that they will nolonger cover terrorism after Dec. 31, when the majority of their policies expire.
To try to counter this deadline, there are four terrorism insurance bills circulating. Senate Majority Leader TomDaschle is said to favor a compromise among them. He is working to come up with a single proposal. But negotiationshave continued for more than two months with little progress. And Daschle reiterated his position yesterday that workon the insurance bill would come after a resolution on the economic stimulus package.
Meanwhile, the U.S. Chamber of Commerce is blanketing Washington’s cable airwaves with ads urging the Senate to passthe terrorism insurance bill approved by the House. They have bought tens of thousands of dollars worth of TV time,and may expand the campaign to markets across the country, depending on what the Senate does.
Consumer interest groups are concerned that industry-drafted plans on terrorism insurance will force taxpayers totake the brunt of the impact. And the insurance industry bailouts extend from terrorist attacks to nuclear reactors.The House voted in virtual secret last week to continue to shield new reactor builders from normal insuranceliability, even if they lack safety domes to contain radioactive releases. Anti-nuclear advocate Harvey Wassermanwrote a piece last week that began, “if terrorists turn a US nuclear plant into a radioactive holocaust, the Housewants you to pay for it.”
- Harvey Wasserman, anti-nuclear activist and author of ??The Last Energy War.
- Bob Hunter, director of insurance at the Consumer Federation of America.