Senate Passes Terrorism Insurance,
Sends Bill To President’s Desk

8:50 p.m. Tues., Nov. 19

Statement Of Senator Patrick Leahy
Terrorism Risk Insurance Act Conference Report, H.R. 3210
November 19, 2002

Mr. LEAHY.  Mr. President, I am pleased to support this conference report to provide a federal backstop for terrorism insurance.  I believe this bipartisan bill will boost our economy by providing extra protection against terrorist attacks for buildings and construction projects with resulting new jobs in Vermont and across the nation.  I agree with President Bush that this legislation is essential for our future economic growth. 

I worked with the distinguished Majority Leader, Senator Dodd, Senator Sarbanes, Senator Schumer and others to craft a balanced compromise in the conference report on legal procedures for civil actions involving acts of terrorism covered by the legislation.  The conference report protects the rights of future terrorism victims and their families while providing federal court jurisdiction of civil actions related to acts of terrorism, consolidating of such cases on a pre-trial and trial basis, and excluding punitive damages from government-backed insurance coverage under the bill.  These provisions do not limit the accountability of a private party for its actions in any way. 

Further, the conference report, identical to the Senate-passed bill, fully protects federal taxpayers from paying for punitive damage awards.   Under the conference report only corporate wrongdoers pay punitive damages, not U.S. taxpayers as some incorrectly claimed on the Senate floor during consideration of the Senate-passed bill.

The U.S. Chamber of Commerce has declared that the conference report “will improve the legal rights of plaintiffs and defendants and, importantly, will help American workers and the economy.”  I agree.

I thank the conferees for rejecting the special legal protections in the House-passed bill. The liability limits for future terrorist attacks in the House-passed bill were irresponsible because they restricted the legal rights of victims and their families and discouraged private industry from taking appropriate precautions to promote public safety. Restricting damages against a wrongdoer in terrorism-related civil actions involving personal injury or death, for example, could discourage corporations from taking the necessary precautions to prevent loss of life or limb in a future terrorist attack.   There is no need to enact these special legal protections and take away the legal rights of victims of terrorism and their families.  

For example, the House-passed bill would have permitted a security firm to be protected from punitive damages if the private firm hired incompetent employees or deliberately failed to check for weapons and a terrorist act resulted. 

The threat of punitive damages is a major deterrent to wrongdoing.  Eliminating punitive damages under the House-passed bill would have severely undercut this deterrent and permitted reckless or malicious defendants to find it more cost effective to continue their wanton conduct without the risk of paying punitive damages.  Without the threat of punitive damages, callous corporations could have decided it is more cost-effective to cut corners that put American lives at risk.  This approach failed to protect public safety, and the conferees rightly rejected it.

In addition, I thank the managers for including language in the conference report to help captive insurance companies participate in the federal backstop program.  Many captives deal in property and casualty lines, but some do not.  Senator Jeffords and I strongly support language in the conference report to allow those captives in property and casualty the option of participating in the program while not requiring other captives to start offering terrorism risk insurance.

The State of Vermont is the premier U.S. domicile for captive insurance companies.  Vermont's captive owners represent a wide range of industries including multinational corporations, associations, banks, municipalities, transportation and airline companies, power producers, public housing authorities, higher education institutions, telecommunications suppliers, shipping companies, insurance companies and manufacturers, among others.  Since 1981, Vermont has averaged approximately 25 captives licensed annually, and those numbers are on the rise.  Vermont closed 2001 with 38 new captives – 37 pure and 1 sponsored – for a total of 527 at year-end.  The first half of 2002 saw 26 new captives licensed in Vermont setting a record pace, according to the Vermont Department of Banking, Insurance and Health Care Administration. 

At a time when the American people are looking for Congress to take measured actions to protect them from acts of terror and jump-start our economy, this conference report is a shining example of bipartisan progress.  I applaud Senator Daschle, Senator Dodd, Senator Sarbanes, Senator Schumer and the other Senate and House conferees on their good work on this bipartisan conference report.

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