House passes
Oxley-Baker terrorism insurance legislation
Louisiana lawmaker calls on Senate to pass ‘lifeline for
the economy while protecting taxpayers’ through temporary government
backstop, requirement of taxpayer dollar repayment
Thursday,
November 29, 2001
WASHINGTON -- The U.S. House voted today to
pass legislation sponsored by Financial Services committee chairman Rep.
Michael Oxley, R-Oh., and Capital Markets subcommittee chairman Rep.
Richard Baker, R-La, aimed at stabilizing the economy by providing
short-term federal assistance to improve the availability and
affordability of terrorism insurance in the wake of the September
11th attacks.
"This is a responsible measure but also a
historic achievement," said Baker. "Why, even my own hometown newspaper,
The [Baton Rouge] Advocate, has commented that, aside from the
actual prevention of new terrorist attacks, the greatest contribution
Congress can make for our country’s economic recovery ‘is to provide … a
financial backstop in case there are major new terrorist losses beyond
the capacity of insurance companies to pay.’ Well, we’ve taken a step
closer to providing that today."
While property-and-casualty insurers were
able to cover obligations for the estimated $40 billion damages related
to September 11, the availability and affordability of terrorism
insurance for businesses will become increasingly less likely. The
primary cause for the potential terrorism coverage crunch is the
announcement of reinsurance companies, which back up such terrorism
insurance policies, that they will not renew coverage by December
31st, when some 70 percent of those policies
expire.
Without the liquidity and protection from
re-insurers, insurance companies face constraints against covering
businesses against acts of terrorism. According to one report, "With no
coverage, lenders won’t lend, builders won’t build, and business will
grind to a halt."
Calling the bill a "lifeline for the
economy that protects taxpayers," Baker emphasized a key feature of the
"Terrorism Risk Protection Act" (H.R. 3210) that provides for the
repayment over time of any federal dollars used in the short-term to
keep the insurance industry solvent should another major terrorist event
occur.
"The House has made it clear there will be
no insurance industry bailout. We believe in the House, and I’m sure
taxpayers agree, that people should pay back when they’ve been lent a
helping hand. The bottom line, here, is an attempt to limit immediate
market disruption, encourage economic stabilization, protect the
interests of taxpayers, and facilitate a transition to a viable market
for private terrorism insurance coverage," Baker said.
A point of partisan contention in the House
and also one apparently slowing Senate consideration, the bill also
contains provisions to protect taxpayers from being liable for and
places limits on lawsuits brought against victims of terrorism and their
insurers.
However, Baker was hopeful that the Senate
would follow the House’s lead and take quick action rather than risk
further and potentially severe instability in the economy.
"I’m confident that Senate Democrats and
Republicans will join us in offering financial assurance to future
victims of terror. I’m confident they won’t put this extremely important
and urgent matter at risk through inaction. I hope we can agree that the
people most responsible for terrorism and the pain and destruction it
brings are the actual terrorists."
"So I particularly hope that the Senate
will not risk disrupting the nation’s economy by failing to act.
Specifically, I am counting on Senator Daschle to exercise his
leadership," Baker added.
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