Sen. Bill Nelson (D-FL) has announced that he is preparing at least two floor amendments to the pending terrorism insurance legislation that are designed to protect insurance consumers, including ILMA members. ILMA members have been monitoring the legislative progress on the legislation in the wake of recent, significant insurance premium increases and, in some cases, policy cancellations.
The legislation (H.R. 3210) is intended to provide a backstop of guaranteed federal funds to cover catastrophic property and casualty losses caused by terrorist attacks in the U.S. The House passed its version of terrorism legislation last November 29, and the Senate has yet to take up the bill on the Senate floor.
Sen. Nelson said that his amendments would prohibit insurance companies from wrongly canceling coverage and would cap the annual increases companies could charge for terrorism insurance at no more than three percent. The Senator’s rationale for the amendments is that, if there is a federal program paying a part of terrorism claims, insurers should have to offer coverage to everyone, and not avoid or cancel customers, for example, that own tall buildings or have property near stadiums.
Senate Democrats are pushing to get the terrorism insurance legislation to a floor vote, as they do not want to be blamed for its potential demise with the mid-term congressional elections this November. According to Democratic leaders, they have a compromise measure to bring to Senate floor, but claim that the Republicans have not yet agreed to its terms.
Controversial tort reform provisions, backed by the Bush administration and added in the House, have been a major sticking point on the legislation in the Senate. The provisions would prohibit punitive damages in cases related to terrorist acts. Democrats oppose the tort reform provisions, agreeing only that Government funds should not be used to pay punitive damages.
The Democrats' move to get the legislation to the Senate floor comes as 14 Republican and 14 Democratic Senators last week urged Majority Leader Thomas Daschle (D-SD) and Minority Leader Trent Lott (R-MS) to bring the terrorism insurance bill to a floor vote as soon as possible. The 28 Senators said that passage of legislation is needed to stabilize the insurance market and to provide financial security in the event of future terrorist acts. President Bush earlier this month urged prompt Senate passage of the legislation, although the President has said that he would not necessarily sign the legislation absent comprehensive tort reform provisions.
In an April 24 letter to Sens. Daschle and Lott, 87 top executives of financial service companies, lenders, and property owners said $7 billion in commercial loans have been placed on hold or cancelled this year because of the expense and difficulty of obtaining terrorism coverage. According to the letter, all sectors of the U.S. economy depend on the availability and affordability of insurance. However, because of the September 11 terrorist attacks, insurance for risks associated with terrorism is neither widely available nor affordable. Some lenders have said they will not originate loans more than $25 million in light of the insurance crisis, the executives added.
