[Congressional Record Volume 148, Number 37 (Tuesday, April 9, 2002)]
[Senate]
[Pages S2387-S2388]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          TERRORISM INSURANCE

  Mr. NELSON of Florida. Madam President, I wish to speak about truth 
in politics. Some people would say that is an oxymoron, but it is very 
much needed in this town. Truth in this town often gets mixed up with 
the excessive political partisanship that starts to raise its head when 
the hot contest on an issue arises, and one such issue arose yesterday. 
The President took a swipe at the majority leader of the Senate over 
the fact that the majority leader was not bringing up legislation on 
terrorism insurance when, in fact, if my memory serves me correctly, in 
the closing hours before the Christmas recess, it was the majority 
leader who brought up the terrorism insurance bill, and it was objected 
to by the minority leadership, specifically the senior Senator from 
Kentucky.
  Then yesterday, the Senator from Nevada offered a unanimous consent 
request to bring up the terrorism insurance bill, and it was objected 
to by the minority leadership of the Senate.
  I wish we would get our facts correct about who is doing what to whom 
and who is trying to bring legislation out to the floor of the Senate. 
The fact is that the majority leader, as a number of Senators, thinks 
there is a legitimate problem as a result of September 11 with regard 
to being able to insure high-value structures in uncertain times of 
terrorism. Therefore, to keep the engines of commerce properly oiled 
and lubricated, the commodity that is often misunderstood, known as 
insurance, needs to be provided.
  If we are successful in getting the parties to come together and the 
legislative branch and the executive branch of Government to come 
together on a bill--this particular legislation that is being talked 
about has a gross omission; and that is, the consumer needs to be 
protected from the rates being jacked up so high using terrorism as an 
excuse. In fact, that is what we are already beginning to see. We are 
seeing the rates of a number of liability, property, and casualty 
policies going through the roof as a result of the uncertainty of the 
climate set about by terrorism.
  There is an easy way to handle that, and if this body does get 
together on a terrorism insurance bill, then clearly it ought to have 
the protection that, first, the premiums collected for terrorism 
insurance not be mixed with the premiums collected for liability, fire, 
theft, slip and fall, and other activities. Why? If an insurance 
company needs to charge an additional amount for terrorism, and there 
is no experience or data save for the September 11 experience, we need 
to know how much is being charged so that the insurance commissioners 
of the 50 States will be able to build some data and see clearly 
whether or not the amount of a premium being charged is, in fact, 
actuarially sound to support the threat of future insurance losses from 
terrorism.
  The commissioners need data and they need experience and the only 
way, from an accounting standpoint, they can accurately measure that is 
the premiums for terrorism insurance are kept separate from all other 
premiums for the normal property and casualty insurance cost.
  A second provision that is absolutely essential for the protection of 
the consumer is that there be a cap on the amount the premium can be 
raised. Instead of these gargantuan rate hikes that are now occurring--
some double and triple the amount that businesses have paid in the 
past--there could be a much more modest rate hike. If that is not 
enough or if that is too much on the basis of the experience--in 
other words, the payout for terrorism losses in the future--the 
insurance commissioners of the 50 States will be able to have a record 
they can then figure out whether that is too much or too little.

  Instead of taking advantage of the trauma of the climate of September 
11, we ought to put a cap in any legislation we pass on the amount the 
rates can be raised by insurance companies.
  Mind you, even though we think this is applicable just to large 
buildings, football stadiums, or public places that might be on a 
target list of terrorists, just wait. We are going to see in 
neighborhoods that happen to be near a nuclear plant the rates for 
homeowner insurance policies and automobile insurance policies jacked 
up; thus, all the

[[Page S2388]]

more reason why we need to separate the premium that applies just to 
the terrorism risk, as well as cap it for the initial rate increase to 
pay for the terrorism insurance.
  There is a third protection of the consumer that must be included in 
any legislation the Congress passes, and that is the prevention of 
redlining or, in other words, the prevention of saying: I am going to 
give you terrorism insurance, but I am not going to give you terrorism 
insurance. In other words, there has to be a mandatory obligation that 
all policies be able to have the terrorism coverage.
  Those three particular points of protection of the consumer must be 
in legislation that comes out of the Senate and was suggested by the 
White House yesterday but with no details: Point No. 1, separate the 
funds from an accounting standpoint so we know how much is going in to 
the insurance company for the terrorism risk; No. 2, cap the amount 
initially that can be raised until some experience can be built up and 
data is available to see if the rate being charged for the terrorism 
risk is actuarially sound; and, No. 3, have a requirement that there be 
the mandatory coverage of the terrorism risk so that there cannot be 
cherry-picking, saying: We will cover you, but we will not cover your 
policy.
  Then the public of America would be well served.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. COLLINS. Madam President, I ask unanimous consent that I be 
permitted to proceed for 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. COLLINS. I thank the Chair.
  (The remarks of Ms. Collins pertaining to the introduction of S. 2077 
are located in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')

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