You are here:HomeIssuesTerrorism Insurance2002President Signs Terrorism Insurance Bill

President Signs Terrorism Insurance Bill

President Bush signed the Terrorism Risk Insurance Act of 2002 on November 26, 2002, bringing the campaign to enact an insurance backstop against potential future...
December 1, 2002

PIA Attends White House Bill Signing Ceremony

President Bush signed the Terrorism Risk Insurance Act of 2002 on November 26, 2002, bringing the campaign to enact an insurance backstop against potential future terrorist attacks to a successful conclusion.

The push for the bill began within days of the September 11, 2001 terrorist attacks in New York and Washington, D.C. and extended through 14 months of lobbying by PIA, a host of insurance industry interests and a broad coalition of business interests directly affected by the lack of available, affordable terrorism coverage.

PIA National was invited by the White House to attend the bill signing ceremony. PIA Executive Vice President Gary W. Eberhart represented PIA at the event, held in the East Room of the White House.

"This legislation has been a priority for PIA since September 11, 2001," said PIA National President Carl G. Stoecklin. "PIA members from across the nation participated in a year-long campaign to secure passage of this measure."

"The lack of available, affordable terrorism insurance has adversely affected many of our members whose clients need this coverage," Stoecklin said. "This temporary backstop will provide the market stability necessary for carriers to again offer this coverage without seriously jeopardizing their solvency."

The Senate passed the bill by an 86-11 vote on Tuesday, November 19. The House of Representatives had passed the bill on a voice vote the week before.

Over the past year, PIA conducted a series of grassroots action campaigns, wrote letters to President Bush and key lawmakers, visited Members of Congress in their Capitol Hill and district offices, issued over 30 press releases and did interviews with trade publications and on TV -- all to help move a terrorism insurance bill through Congress.

The effort was a prime focus of PIA's March 2002 annual Federal Legislative Summit. In June 2002, PIA leaders met with Speaker of the House J. Dennis Hastert (R-IL) to reaffirm our support of the legislation.

President Bush embraced terrorism insurance as one of his primary legislative goals, campaigning for it regularly and making calls to individual lawmakers urging them to resolve differences.

"This bill is good for our country, good for the economy, and good for PIA members whose clients need available and affordable insurance," said Eberhart. "It will protect our nation from the potential financial devastation of another terrorist attack. It gives agents markets and puts the insurance industry back on a firm footing, providing a level of financial certainty needed for our nation's economy to move forward."

Under the bill, when the Treasury Secretary, in consultation with the Secretary of State and the Attorney General, certifies that a terrorist attack has occurred causing at least $5 million of insured losses, a federal backstop for terrorism insurance would come into effect. Before any federal assistance becomes available, companies will need to meet a deductible based on a percentage of direct written premiums for commercial U.S. risks. The federal government would then cover 90 percent of any losses above the individual company retention levels.

The backstop contains provisions requiring repayment by carriers, according to a formula, of losses covered by the federal government. The program will cover all commercial property-casualty lines, including workers' compensation and business interruption. The Treasury Secretary is empowered to extend the program to group life without the need for additional legislation, if a mandated study identifies a need.

The determined efforts of PIA members from all across the country over the past 14 months played an important role in securing passage of this bill. PIA members will now be better able to offer their clients terrorism insurance that is both available and affordable.

s article originally appeared in the November/December 2002 PIA Connection.

Filed under: