[Congressional Record Volume 148, Number 82 (Wednesday, June 19, 2002)]
[Senate]
[Page S5768]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  TERRORISM RISK INSURANCE ACT OF 2002

  Mrs. BOXER. Mr. President, I voted for S. 2600, the Terrorism Risk 
Insurance Act of 2002. But I did so with reservations.
  I recognize the need for a Federal backstop for terrorism insurance, 
and although I believe the way this bill is designed is flawed, it is 
better than the status quo. Insurers are not making enough terrorism 
insurance available in key areas and rates are rising astronomically 
because insurers cannot count on a Federal backstop to possible losses 
in the event of another terrorist attack.
  I would have preferred that we create a risk-sharing pool that would 
not have placed so heavily a burden on the taxpayer. In a risk-sharing 
pool, insurance companies would pay a percentage of their premiums into 
a pool. In the event of an attack, affected companies could pay claims 
out of the pool after each meets its individual responsibility for 
covering losses. If the pool were ever depleted, then the government 
would lend the pool the money to cover remaining claims. In that way, 
the taxpayer would eventually be made whole. The structure we are 
approving today will put the taxpayer on the line for losses as soon as 
a company's individual retention level is met. And the taxpayer will 
never be paid back.
  In addition, I am also concerned about the lack of consumer 
protections in the bill. Not only does the bill fail to provide Federal 
protection from price gouging, it preempts States from protecting 
consumers through the prior approval process. The Foundation for 
Taxpayer and Consumer Rights in California and the Consumer Federation 
of America have raised concerns that long-standing State systems for 
protecting consumers will be thrown out the window.
  I worked on an amendment to replace the State preemption language in 
the bill with language stating that terrorism insurance rates shall not 
be subject to a waiting period greater than 60 days under any State 
law. This would have allowed California and 21 other States to retain 
oversight for prior approval over increases in terrorism insurance 
rates while also making sure that the insurance is made available 
quickly.
  In a colloquy on the issue, Senator Dodd has committed to working 
with me as this bill goes to conference. As a result, I did not offer 
my amendment. But given the number of Americans involved, the taxpayer 
exposure to risk, and the leverage that insurers will have over 
consumers, I believe we must allow States to protect consumers.
  Though I voted in favor of moving this process forward, I will remain 
vigilant throughout the rest of the process and hope to see 
improvements in the legislation made in the conference committee.

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