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Blank checks for insurance industry?


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Posted by tonyb on October 10, 2001 at 04:19:43:

U.S. TERROR INSURANCE POOL BILL STILL IN WORKS

By Bill Rigby and Andrew Clark

NEW YORK/WASHINGTON, Oct 9 (Reuters) - Insurers and politicians
are still locked in talks over legislation that would create a
government-backed insurance pool to cover the costs of future attacks
in the United States following the Sept. 11 suicide hijackings. Leading
insurance executives discussed details of the plan in a conference call
among themselves on Tuesday, while Connecticut Democratic Senator
Chris Dodd -- who is taking the lead in drafting the legislation -- lined
up support in Washington.

"We have agreed on some principles," Dodd told reporters on Tuesday
after meeting with Senate Republicans. "It's a difficult bill to write ... but
we think we can put together a clear bill, we hope, by the end of the
week." Congress has yet to be persuaded, however, with one
Representative's spokesman describing the plan as "writing blank
checks" for the insurance industry.

Insurers have been pushing hard for government help in covering
future terror attacks since the airborne destruction of the World Trade
Center on Sept. 11 that left more than 5,000 people dead or missing.
Insurers say they can pay the $40 billion-or-so in expected claims from
the attack, but warn that they cannot support repeated terror claims,
especially if reinsurance companies start excluding such claims in the
coverage they sell to insurance companies, as is widely expected.

GOVERNMENT AS INSURER OF LAST RESORT

U.S. insurers are looking at government-backed pools in Britain, Spain
and Israel as they frame the legislation. Essentially, insurers want the
federal government to step in as the insurer of last resort on terror
claims. The alternative, they say, is dramatic increases in insurance
prices, or withdrawal of coverage altogether.

President Bush gave the broad idea his blessing when he met with
insurers the week after the attack, but other Republicans in Washington
are proving harder to convince.

"He'd just as soon not get into the business of writing blank checks," said
Mike DiResto, a spokesman for Louisiana Republican Representative
Richard Baker, who chairs the House of Representatives subcommittee
with jurisdiction over the insurance industry. Dodd said that he had
reached agreement in principle with key Senate Republicans on such
government assistance for insurers, but cautioned that details were still
being worked out. "It is very important to have the administration on
board," Dodd told reporters. "Those conversations are occurring now.
We should have an answer hopefully by the end of the week."

Insurers are in a hurry to get the legislation through before discussions
on the annual renewal of insurance and reinsurance policies begins in
earnest. Most big-ticket insurance and reinsurance contracts expire on
Dec. 31. But opposition in Washington may yet delay the plan. "Unless
the administration directly contacts Congressman Baker and says 'in our
estimation this is something that needs to be done yesterday,' I imagine
it will be a thoughtful process to get it done right, rather than quickly,"
said DiResto.

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