House Passes Terrorism Insurance Bill
Senate to Take Up Measure Called Vital to Economy


By Edward Walsh
Washington Post Staff Writer
Friday, November 15, 2002; Page A01


The House passed legislation last night to provide up to $100 billion to
help the insurance industry cover claims from future terrorist attacks,
sending the measure to the Senate, where Majority Leader Thomas A. Daschle
(D-S.D.) has promised prompt action.

The voice vote was a victory for President Bush, who made the legislation's
passage a priority in recent weeks, and for the insurance industry and
developers of major, high-profile real estate projects. They have said the
difficulty in obtaining affordable terrorism insurance has threatened many
of their projects and undermined the overall economy.

Racing to wind up its lame-duck session after the Nov. 5 midterm elections,
the House derailed another major bill, to overhaul the nation's bankruptcy
laws. On a procedural vote, lawmakers blocked consideration of the measure,
effectively killing it for this Congress.

Early today, in a parliamentary maneuver that critics likened to "the
legislative equivalent of a fraternity stunt," the House reversed itself,
dropped a controversial provision dealing with abortion clinics and sent
the bill to the Senate, where foes said it would die.

The House agreed to a five-week extension of unemployment benefits for laid-
off workers, over protests from Democrats that it was too little in light
of high jobless rates in many areas. The Senate last night passed a more
generous unemployment package that would extend benefits through March,
raising the possibility of an end-of-the-session snag between the two
houses.

Meanwhile last night, White House and Senate negotiators agreed on
legislation to create an independent commission to investigate the Sept. 11
terrorist attacks. But an effort to revive a scaled-back version of Bush's
proposal to bolster faith-based charities fizzled in the Senate when
Democrats tried to add provisions, prompting a partisan deadlock.

The key issue in the terrorism insurance debate centered not on the bill's
insurance provisions but on Republicans' longstanding efforts to curb large
jury awards in liability lawsuits. The House earlier passed a version of
the bill that would have prohibited victims of terrorist attacks from
seeking punitive damages from companies and real estate owners.

Courts sometimes assess punitive damages -- on top of awards for monetary
loss or pain and suffering -- to punish a company, manufacturer or other
party deemed to have recklessly caused injuries or death. The Senate
omitted the proposed ban, and the White House last month backed down from
insisting on a ban on punitive damages.

But the compromise bill that House and Senate negotiators agreed to did not
satisfy House Republican leaders, who strongly supported the ban on
punitive damages. They held up consideration of the measure by the full
House until last night. But in the end, virtually all opposition to the
compromise bill evaporated as the House passed the measure by voice vote.

The bill would provide as much as $100 billion over three years to cover 90
percent of future terrorism-related insurance claims. Government aid would
kick in when terrorism-related losses exceed minimum levels of an insurance
company's premiums. The threshold levels to qualify for the aid would be 7
percent of premiums in the first year, 10 percent in the second year and 15
percent in the third year.

The measure would consolidate civil lawsuits stemming from a terrorist
attack in a single federal court for trial under the laws of the state
where the attack took place. That provision, supported by Republicans, is
designed to prevent defendants such as property owners and insurance
companies from facing multiple claims in several jurisdictions from the
same event.

House Financial Services Committee Chairman Michael G. Oxley (R-Ohio)
portrayed the bill as vital for economic development. He said a recent
survey estimated that real estate projects worth more than $15 billion have
been canceled or are being delayed because of a lack of terrorism insurance
coverage.

"This bill is absolutely necessary to the well-being of the American
economy," Oxley said. "We need this backstop now."

The only criticism of the bill was voiced by House Majority Whip Tom DeLay
(R-Tex.), reflecting disappointment that the punitive-damages provision had
been dropped.

He said the measure will provide "no protection from predatory trial
lawyers." He said Bush agreed that this was a shortcoming in the bill and
had promised to work to correct it.

"We're going to lock the door to the federal treasury against trial
lawyers," said DeLay, who will be House majority leader in the next
Congress.

There has been considerable debate over the need for the government to
intervene in the insurance market to help companies and real estate
developers obtain coverage for acts of terrorism. After last year's attacks
on the World Trade Center and the Pentagon, many insurance companies
stopped offering such coverage, while others steeply increased premiums.

But in recent months, more terrorism coverage has become available. Some
consumer groups charged that the federal legislation was little more than
an insurance industry bailout.

"It's a handout and it's way too generous," J. Robert Hunter, director of
insurance for the Consumer Federation of America, said when House and
Senate negotiators announced a compromise.

Earlier this week, New York City Comptroller William C. Thompson Jr. issued
a report detailing a steep increase in insurance premiums and a sharp drop
in the availability of insurance coverage there after the Sept. 11 attacks.
He said premiums on some expensive Manhattan properties rose by 73 percent.

"Insurance companies are taking advantage of New Yorkers," Thompson
said. "They are not helping the city right now, and this is undermining our
ability to retain and attract new business. Once again, New Yorkers are
being penalized."

In other congressional action yesterday, the Senate approved a bill meant
to deter terrorism at the nation's 361 seaports. The House extended a law
to prevent automatic cuts in Medicare and other entitlement programs and
extended the 1996 welfare law through March.

Staff writers Helen Dewar and Dana Milbank contributed to this report.


© 2002 The Washington Post Company

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