SECTION: FINANCIAL; Pg. E03

LENGTH: 475 words

HEADLINE: Terrorism Insurance Still Rare; Industry Waits for Congress to Back Coverage for Attacks

BYLINE: Jackie Spinner, Washington Post Staff Writer

BODY:




A year after the Sept. 11 attacks, terrorism insurance remains largely unavailable to big commercial property holders, a problem that will not go away without federal intervention, said Maurice R. Greenberg, chief executive of insurance giant American International Group.

Although AIG offers some terrorism insurance, its policies are limited, as are those of its competitors, Greenberg said yesterday in a discussion of terrorism insurance at the Center for Strategic and International Studies in Washington.

"We're in the business of risk," he said. But "I'm not going to bet the company on a single event." Congress has been grappling for months with how to address the shortage of terrorism coverage through legislation that would provide a federal backup to help pay insurance claims resulting from terrorist attacks.

Congressional sources said there was little progress during the August recess in resolving differences between competing House and Senate bills. Both bills are designed to provide an incentive for insurers to offer more coverage. The Senate bill would provide insurers with billions of dollars to help pay claims. The House measure also would provide government funding but would require the money to be repaid by insurers and policyholders.

A conference committee chaired by Sen. Paul S. Sarbanes (D-Md.) has not convened, and Jesse Jacobs, a spokesman for Sarbanes, said yesterday that no official meeting has been scheduled.

But Rep. Michael G. Oxley (R-Ohio), chairman of the House Financial Services Committee, said key conference members met informally during the special congressional session last week in New York.

Oxley said he expects the final bill to be ready by the end of the month.

"We have been fortunate that -- with the exception of the anthrax episode -- no further attacks have happened," said Oxley, who participated in the discussion with Greenberg. "But if another major attack were to occur, the same insurance system is no longer in place to ensure that victims are compensated and made whole and prepared to face additional events."

Some consumer advocacy groups oppose the legislation and have argued that the insurance industry should resolve the issue on its own.

But Greenberg said the world reinsurance industry -- which provides insurance for insurance companies -- is still offering very limited coverage and has little incentive to get back in the market.

He said reinsurers have faced catastrophic losses beyond the Sept. 11 attacks, including the recent floods in Europe.

Greenberg said he would buy reinsurance to back up AIG's policies if full coverage existed.

But it doesn't, he said, and "the only one that has that is the guy with the printing press, the U.S. government, because we're dealing with liabilities that are enormous."

LOAD-DATE: September 11, 2002