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HEADLINE: Bush Sets Friday Deadline for Terrorism Insurance Bill

BYLINE: a Washington Post Staff Writer

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President Bush asked lawmakers yesterday to reach an agreement by Friday on legislation that would create a federal backup to help pay future terrorism insurance claims.

But the deadline will be meaningless if the White House and Senate Democrats are unwilling to compromise on a key threat to the legislation -- their disagreement over the degree to which property owners should be protected from lawsuit claims arising from future terrorist attacks.

Bush met yesterday with House and Senate lawmakers in an attempt to focus the negotiations and to draw attention to an issue that the White House has linked to the health of the economy. "All of us here around the table are concerned about jobs, concerned about our economy," Bush told reporters after the meeting. Lawmakers have been grappling for months with how to address a shortage of terrorism coverage after the Sept. 11 attacks. The problem has rippled through the commercial real estate industry, although risk experts disagree on how widespread the shortage is and how much federal relief is warranted.

A recent Real Estate Roundtable survey of its members found that more than $ 15.5 billion worth of real estate projects in 17 states have been stalled or canceled because of a scarcity of terrorism insurance.

And on Monday, Fitch Ratings cut the credit ratings of three commercial real estate bond deals because the properties did not have full coverage. The move followed a similar action Friday by Moody's Investors Service, which lowered ratings on $ 4.5 billion of commercial mortgage bonds.

"The real issue with terrorism risk is we have no way of judging frequency or severity," said Jacques E. Dubois, chairman and president of Swiss Re America Holding Corp., the U.S. affiliate of the global reinsurance giant.

Dubois said yesterday that his company, which lost $ 2 billion in the Sept. 11 attacks, continues to exclude terrorism coverage from its policies. "There continues to be grave concern with the ability to price it, and that doesn't change anytime soon," he added.

Both the House and Senate have passed bills designed to encourage insurers to offer more terrorism coverage by limiting their exposure to future attacks. The Senate bill would provide insurers with billions to help pay claims. The House measure would also provide government funding but would require that the money be repaid by insurers and policyholders.

A conference committee chaired by Sen. Paul S. Sarbanes (D-Md.) has not yet convened, although lawmakers have been meeting informally on the legislation. Congressional sources said Sarbanes was trying late yesterday to put together a meeting.

Bush invited 12 members of the conference committee to yesterday's meeting, including Sarbanes, Sens. Christopher J. Dodd (D-Conn.) and Phil Gramm (R-Tex.), and Reps. Michael G. Oxley (R-Ohio) and John J. LaFalce (D-N.Y.).

The closed-door meeting was "a positive one," Dodd spokesman Marvin Fast said.



LOAD-DATE: October 02, 2002