Terrorism insurance bill could be law by Sept.

Congress will pass a terrorism insurance law by September, U.S. Rep. Jim Saxton, R-N.J., told guests at a lunch hosted by law firm Wolf, Block, Schorr and Solis-Cohen, LLP.

"I believe there will be a new statute that will be signed into law sometime in September. It will provide some relief to the problem," Saxton told participants at a lunch held July 29 at the Sheraton New York Hotel and Towers.

Saxton, who serves as chairman of the Joint Economic Committee and the House Special Oversight Panel on Terrorism, outlined the issue for the audience. Insured losses from the World Trade Center attacks are expected to total $40 to $50 billion, more than twice the cost of any other disaster in U.S. history. Before Sept. 11, the largest loss stemming from a disaster occurred in 1992 when Hurricane Andrew caused an estimated $20 billion in losses.

As a result, building owners across the country have been having difficulty obtaining terrorism insurance. If it is available, owners must pay exorbitant rates for coverage.

As an example, Saxton said the MTA recently had to pay $6 million for $1.5 billion of coverage that included a terrorism provision. The Golden Gate Bridge in San Francisco, which has a replacement cost of $2 billion, currently has no terrorism insurance coverage, he added.

The issue is also having a damaging impact on real estate transactions, such as the sale and refinancing of buildings. The Mortgage Bankers Association has estimated that, so far, the issue has killed $3.7 billion in real estate deals.

In June, the Senate passed a terrorism insurance bill that mirrors a bill passed by the House last fall. Recently the House and Senate appointed conferees to work out differences in the two bills. Among Senate conferees is Sen. Charles Schumer, D-N.Y

The Coalition to Insure Against Terrorism welcomed the appointment of conferees, in a statement issued last week.

"As they set about their work, we urge all conferees to consider CIAT's longstanding objectives. Specifically, it is our hope that any compromise legislation will include a definition of terrorism that is sufficiently broad to ensure coverage for future terrorist attacks; that the backstop is of sufficient duration; that comprehensive coverage include losses related to biological, chemical, radiological and cyber attacks; and that individual insurance company caps will be an essential component of any program," said CIAT spokesman Martin DePoy.

A few weeks ago, President George W. Bush stressed the importance of a terrorism insurance law and urged Congress to move quickly in passing one.

Saxton said he expected most differences to be resolved easily, although secondary liability could prove to be a sticking point. He admitted, however, that Congress was facing time constraints particularly since it is an election year.

"We didn't get to where we wanted to be as quickly as hoped," he said. "Hopefully we'll be able to move quickly to make up some of the ground we've lost."

Saxton outlined six reasons for the country's economic prolonged economic expansion since the early 1 980s, such as the Fed's monetary policy, lower taxes, reduced government spending, international trade and investment in technology. He said failure to address this issue could pose a threat to these "building blocks of economic growth." Companies forced to spend large amounts of money on insurance and security, thereby diverting money away from technology, he said.

"We are now being forced to spend money on non-productive items like insurance and legal fees," Saxton said.