President Signs Terrorism Insurance Bill --
Reaction Of Senate Judiciary Chairman Patrick Leahy
 

[WASHINGTON (Tues., Nov. 26) – President Bush Tuesday signed into law a bill that will help insurance companies cover the cost of catastrophic claims in the event of future terrorist attacks.  The legislation will help builders secure insurance at cost-effective rates.  Following is the reaction of Sen. Patrick Leahy (D-Vt.), chairman of the Senate Judiciary Committee, who worked on the bill and helped clear the way to its enactment.]

“At a time when the American people are looking for Congress to take effective and measured action to protect them from acts of terror and to jump-start our economy, this bill is a shining example of bipartisan cooperation.

“It will boost our economy by offering extra protection against terrorist attacks for buildings and construction projects, and that will mean new jobs in Vermont and across the nation.  President Bush is right that this legislation is essential for our future economic growth.  The U.S. Chamber of Commerce has declared that this bill will improve the legal rights of plaintiffs and defendants and, importantly, will help American workers and the economy, and I agree.

“I worked with Majority Leader Daschle, Senator Dodd, Senator Sarbanes, Senator Schumer and others to craft a balanced compromise on legal procedures for civil actions involving acts of terrorism covered by the legislation.  The final version protects the rights of future terrorism victims and their families while providing federal court jurisdiction of civil actions related to acts of terrorism, consolidating 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.

“With language identical to the Senate-passed bill, this bill also fully protects federal taxpayers from paying for punitive damage awards.  Under the conference report, only corporate wrongdoers pay punitive damages, not U.S. taxpayers.

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

“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.  The House’s approach failed to protect public safety, and the conferees rightly rejected it.

“The final bill includes provisions to help captive insurance companies participate in the federal backstop program.  Many captive firms deal in property and casualty lines, but some do not.  Senator Jeffords and I strongly supported language in the final bill 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 set a record pace with 26 new captives licensed in Vermont, according to the Vermont Department of Banking, Insurance and Health Care Administration.

“This is a bill that will do what it is supposed to do, and it does it responsibly.”

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