SECTION: NATIONAL; Pg. 12

LENGTH: 673 words

HEADLINE: Schools appeal to Congress for help with insurance;
Terrorism worries jeopardize coverage

BYLINE: By Bruce Alpert; Washington bureau

BODY:
WASHINGTON -- The nation's school districts are asking Congress for help from potentially dramatic increases in liability insurance as a result of the Sept. 11 terrorist attacks on America.

"We're facing a very serious problem, and we hope that Congress will respond," said Jimmy Fahrenholtz, a member of the New Orleans School Board who was in Washington, D.C., this week with other school board members from across the country to lobby members of the House and Senate.

School officials say they already faced increases in insurance costs in the aftermath of the Columbine High School massacre in Colorado almost three years ago.

And the September attacks that destroyed the World Trade Center and damaged the Pentagon, they say, have led some carriers to drop coverage and others to sharply raise prices, some more than doubling premiums. "With tight budgets, this could mean that less goes to the education of the kids and that's unfortunately the situation we are facing," said Raylun Stevens, chief financial officer for Jefferson Parish schools.

The House has responded to the potential insurance squeeze by passing legislation, sponsored by Rep. Richard Baker, R-Baton Rouge, to make the federal government the backstop if a terrorist attack left insurance companies without the assets to pay claims.

In effect, the federal government would step in if the industry sustains $1 billion or more in losses from a terrorism attack, offering long-term, low-interest loans to help insurance companies pay the claims.

The Senate has yet to take up similar legislation, with some Democrats saying the House bill went too far in limiting punitive damages and capping attorney fees.

Baker initially proposed what he called a middle ground, to allow liability lawsuits when plaintiffs can establish negligence by the owners of potential targets of terrorist attacks: airplanes, school buildings, office complexes and stadiums.

But the House voted instead to limit almost all punitive suits in most terrorism attacks.

Linda Roan, spokeswoman for St. Tammany Parish schools, said the district is concerned about future increases in insurance rates and hopes Congress will take steps so that costs don't rise substantially.

"We want to maximize the resources going into the classroom instruction and minimize spending on other items such as insurance," she said.

Carl Coleman, director of risk management for Orleans Parish schools, said the district already has been warned by some of its insurance carriers that they won't renew existing policies, due to expire April 30, because of the continued terrorism threat.

Other companies have warned of big increases over the $1 million the school district pays for insurance, said Coleman, who noted that the premiums already come with a $100,000 deductible to keep costs down.

Michael DiResto, spokesman for Baker, said the congressman is convinced that his legislation, if enacted by the Senate, would significantly improve the insurance outlook for school systems, businesses, sports stadiums and other high-profile properties. The bill would reduce the risk that an insurer could be forced into bankruptcy by another terrorist attack, and should make companies more willing to renew policies without the huge increases many are demanding if they offer coverage at all, he said.

One factor holding up action in the Senate is the reluctance of many businesses and governmental entities to come forward and admit they lack adequate insurance, DiResto said.

"It's not something they want to advertise," he said.

Stephens of the Jefferson Parish School District said insurers have been reluctant to present estimates on how much rates will be increased as a result of Sept. 11 events. The district's three-year policies for property and liability insurance expire this year. They currently cost $900,000 for liability and $753,000 for property insurance.

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Bruce Alpert can be reached at bruce.alpert@newhouse.com or (202) 383-7861.

LOAD-DATE: February 9, 2002