Congressman Neil Abercrombie voted today to ensure continued insurance coverage for terrorist acts, but voted against a Republican plan which uses the September 11^th terrorist attacks as a pretext to provide a windfall to large insurance companies.

Speaking of today’s votes on the Terrorism Risk Protection Act (H.R. 3210), Abercrombie said:

"No one questions the need for Congress to act on terrorism insurance. The goal is to ensure that consumers and businesses- especially small businesses- can obtain affordable insurance against terrorist acts.

"As a consequence of the September 11the terrorist attacks, the reinsurance market for terrorism coverage has evaporated. Primary insurers are therefore withdrawing coverage or pricing it exponentially higher. Without terrorism coverage, lenders will be less likely to lend and new investment will not occur.

"However, the Republican bill is significantly flawed. It fails to protect the taxpayer by requiring a substantial upfront contribution from the insurance industry - it triggers federal financial assistance once industry losses exceed a one billion ($100 million trigger for small companies). The Republican version does not deal with the ‘pass-through’ problem - there is not mechanism to prohibit commercial insurers from simply pocketing the federal dollars while simultaneously increasing the charges to the policy-holder. In addition, it does not ensure that terrorism insurance is provided for all property and casualty coverage.

"The Republicans have significantly overreached in this legislation by adding an anti-victim provision that has nothing to do with preserving the market for terrorism insurance. Instead, the Republican bill seriously limits the rights of victims and their families to recover damages when they have suffered serious harm. These provisions, cynically labeled ‘litigation management,’ would:

- completely eliminate punitive damages in terrorism cases, not just for the insurer and the government but for wrongdoers regardless of their conduct;

- limit non-economic damage awards by either capping such damages or eliminating joint damages for non-economic damages, or both; and

- limit attorneys' fees for plaintiffs' attorneys only, but not for attorneys representing other parties."

Abercrombie voted for alternative Democratic bill language, which like the Republican bill, provides federal assistance to property and casualty insurance companies to help cover large losses from acts of terrorism.

The Democratic alternative significantly improved the Republican product by eliminating the "litigation management" provisions and requires insurance companies to assume a larger share of terrorism losses.

Unlike the Republican bill, the Democratic substitute allows any insurance company to receive federal aid once it has incurred terrorism losses of 7% of its net premiums and requires property and casualty insurance companies to include coverage for terrorism in all commercial policies, on terms similar to coverage for other possible losses.