[Congressional Record (Bound Edition), Volume 148 (2002), Part 8]
[Senate]
[Pages 10626-10627]
[From the U.S. Government Publishing Office, www.gpo.gov]




            TERRORISM RISK INSURANCE ACT OF 2002--Continued

  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. LIEBERMAN. I thank the Chair. Madam President, I rise to speak in 
favor of S. 2600, the Terrorism Risk Insurance Act of 2002. Before I 
get to the substance of the measure, I thank and praise my colleague 
and friend from Connecticut, Senator Dodd, for his extraordinary work 
in drafting a practical, effective solution to the terror insurance 
crisis.
  As we all know, this has been an arduous and, at times, frustrating 
process. Senator Dodd has proven to be not only tenacious but almost 
divinely patient in pursuit of this legislation. I congratulate him and 
thank him for the success that I am confident this bill will enjoy when 
it is voted on a little more than an hour from now.
  I wish to speak for a moment about why this is so important, perhaps 
as a summary as we approach the vote.
  Property and casualty insurance is not an optional matter for 
businesses in our country. Nearly every business I know of buys 
insurance to protect its equipment, its property, its stock, to guard 
against liability, and to safeguard its employees, for instance, under 
State workers compensation laws. Property and casualty insurance is 
required by investors and shareholders. Of course, it is required by 
banks that lend for construction of new buildings or other projects.
  In the event property and casualty insurance for major causes of loss 
is not available or is prohibitively expensive, businesses face very 
painful choices and, in fact, will probably end up being paralyzed. 
Construction projects will come to a halt, and banks will not lend. If 
one multiplies this across an economy, the impact will be quite severe 
and particularly difficult and painful at this time as our economy 
remains uncertain and flat.
  We are here today because the ability of businesses to continue 
buying insurance will be placed at severe risk if we fail to address 
the way life and risk have changed since the attacks on

[[Page 10627]]

America of September 11. Underwriting an insurance policy obviously 
requires companies to assess that risk and to estimate damages in a way 
that is much more tangible than most of us have done, although we know 
our lives and our history were changed on September 11.
  For those in business and in the business of insurance or 
reinsurance, this comes down to an attempt to evaluate that risk in 
terms of probabilities and ultimately dollars and cents.
  In the case of claims for damages caused by terrorist attacks, there 
is obviously no easy way to do this. There are so many uncertainties, 
but one thing is certain, and that is that losses from terrorist 
attacks, as we have already painfully seen and felt, can cost tens of 
billions of dollars, and under worse case scenarios, possibly hundreds 
of billions of dollars.
  Insurance is a very competitive industry, but what most Americans, 
although most have contact with some form of insurance, may not realize 
is that insurance companies need and buy their own insurance. In other 
words, they are dependent on so-called reinsurers that help them spread 
the risks that they assume when they sell insurance to us and cover 
their losses.
  When reinsurers will not renew their contracts unless they contain 
terrorism exclusions or limitations, there are going to be an awful lot 
of insurance companies that will not be able to provide terrorism 
coverage, in most cases not at any cost but in other cases only at a 
prohibitive cost. That is not just a possibility today; that is a very 
real probability.
  Across the country, insurers are in danger of losing their contracts 
with reinsurers because of the reinsurers' unwillingness to accept the 
risks of possible terrorist attacks. If this happens, and the insurers 
are not able to include terrorism exclusions or limitations, insurers 
may not be able to offer any policy at any price.
  This is not a matter of speculation anymore. Notices have effectively 
gone out, discussions have occurred, letters have been exchanged 
between reinsurers and insurers and those who are insured, as we read 
in the paper today.
  That uncertainty on the part of the insurance industry has now come 
to the point where it is haunting consumers and will hurt consumers, 
purchasers of insurance, developers, businesses, and real estate 
owners. American businesses will not be able to get the policies they 
need at a reasonable price. They will not be able to get the financial 
protection they require.
  There is nothing we can do in Congress within the limits of our 
Constitution, as I read it, to require by law that insurance companies 
write policies that they do not want to write because of what they 
evaluate to be a market and financial factor, but we can and must avoid 
creating the conditions that force reinsurers to drop insurers and 
insurers to drop American businesses or charge such exorbitant rates 
that they may as well be dropping them off their rolls.
  We have to intervene in this process to create a backup, to create 
enough security for reinsurers to reenter the market and for insurers 
to continue to insure American businesses and keep them going and 
growing hopefully at this stage in our economic history.
  In recognition of this serious crisis, State regulators are already 
considering terrorism exclusions, as they must, consistent with their 
responsibilities to oversee the solvency of the insurance industry, but 
State laws will only patch the problems and leave businesses without 
the insurance they need to continue operating. They will not eliminate 
the crisis. It is clear, therefore, that we in Congress must act, and 
this sensible legislation is clearly the way to do it. This legislation 
will provide businessowners with the opportunity to buy insurance 
against terrorism claims and to do so in the private market as well. It 
would establish a temporary Federal backstop for insurance to cover 
against damages resulting from terrorist attacks, a program that would 
last for a year and gives the Secretary of the Treasury authority to 
extend the program for another year.
  This temporary backstop is intended to provide the insurance industry 
with time to assess the dramatically changed risk of claims resulting 
from terrorist attacks.
  As the industry determines how to price the risk and determine 
appropriate premium levels for terrorism insurance, hopefully the need 
for the Federal emergency backstop we are creating will lessen.
  I do point out that what this legislation will accomplish is not 
unprecedented. In fact, the Federal Government has a history of 
partnering, if I can put it that way, with the insurance industry to 
provide coverage for risks that are just too big or unpredictable or 
uninsurable, literally, for the industry to handle alone. I cite as 
examples the flood insurance programs, the crop insurance programs, or 
the nuclear liability insurance programs that the Federal Government is 
involved in as a supplement or assist or backstop to private insurance 
industries. Those risks are, in some ways, actually more insurable than 
terrorism, but in each case the Federal Government stepped in because 
we understood the very real risk of people having their policies 
dropped and being left without basic protection.
  In the interest of economic security and in some sense of 
consistency, we now have to offer the American people a similar 
guarantee after September 11 that insurance coverage will be offered in 
the case of terrorism.
  Again, I congratulate Senator Dodd and all those who have worked with 
him, as well as members of the Banking Committee, and, not 
surprisingly, because of the suffering endured in New York in human and 
economic terms, our colleagues from New York, Senator Schumer and the 
occupant of the chair, Senator Clinton. I thank them all for their 
leadership. I thank everyone for the ultimate spirit of accommodation 
that will, I am confident, allow this bill to pass. We need it to 
become law as soon as possible, and I am hopeful that today's action 
will be to exactly that result before it is literally too late.
  The PRESIDING OFFICER. The Senator from Michigan.
  Ms. STABENOW. Madam President, I ask unanimous consent that I be 
recognized to speak as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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