Published January 13, 2015
After a day-long debate, the House of Representatives passed a bill that would cover payouts by the insurance industry if there were another massive terrorist attack and restrict the ability of attack victims to sue for damages in court.
The Terrorism Risk Protection Act would commit the government to paying 90 percent of all insurance company claims from future terrorist attacks if the payouts reach $1 billion or more. The measure requires insurance companies to reimburse the government for aid received, but assistance would last for up to three years.
Democrats who had supported an earlier version of the legislation jumped ship when Republicans, at the behest of the White House, included provisions that bar punitive damages and cap attorneys' fees in lawsuits against building owners, security firms and other businesses that fail to protect individuals from terror attacks.
"If anyone can convince me that a slippery floor is similar to a terrorist attack, I will vote for the bill," said Rep. James Sensenbrenner, R-Wis., a supporter of the changes.
Opponents like Rep. Louise Slaughter, D-N.Y., called the liability provisions "a heavy-handed attempt to curtail victims' rights."
An alternate version of the House bill proposed by Rep. John LaFalce, D-N.Y., failed on a near party-line vote. That bill offered financial assistance to insurance companies but required them to pay a deductible for receiving government funds. It also allowed lawsuits to be filed in either state or federal courts and didn't limit damages to plaintiffs.
President Bush weighed in on the vote, commending the House "for taking an important step toward ensuring the continued availability of insurance for terrorist-related acts and for ensuring that victims of terrorism don't also become subjects of unfair lawsuits."
The White House badly wants an insurance assistance bill and has contradicted itself by expressing support for the Republican-backed House bill as well as a Senate draft that does not include the last-minute provisions.
The Senate draft does not require reimbursement to the government but would make the bailout kick in at the $10 billion threshold.
Backers of the House legislation insisted assistance to insurance companies is needed to avert major economic disruption and does not constitute a bailout of the industry. It would be difficult to get bank loans for projects such as building construction, pipelines and bridges without terrorism coverage, they said.
"A lack of available, affordable insurance coverage for businesses could cause some significant disruptions next year, and that's the last thing we need as the economy is struggling to regain its footing," charged Rep. Michael Oxley, R-Ohio, chairman of the House Financial Services Committee. "We cannot let the terrorists win by disrupting our economy because we failed to do our job."
The industry is closely watching the debate, and many companies have put off writing new policies for the first of the year until they know whether the government will help them pay the losses from another attack.
Before Sept. 11, insurance policies – both commercial and residential – covered terrorist acts without additional charges. According to the industry, the Sept. 11 attacks left them footing $30 billion to $50 billion in terrorist-related payments and suggested they might go under in the payoff.
Now, many companies have threatened to exclude terrorism coverage from their policies if the government doesn't help because of bank-breaking costs. Many are unable to raise their premiums to pay for this cost because of strict state price controls.
The Associated Press contributed to this report.