With time running short for Congress to adopt a plan that would help the insurance industry deal with losses from future terrorist attacks, the insurers say they strongly favor a Senate plan that would require them to pay for the first US$10 billion in damage
While they would prefer to shoulder less than US$10 billion initially, they say a House plan, which provides long-term loans, is less appealing because it sets no limits on how big their losses might eventually be.
Without some measure of their potential losses, the insurers say, they cannot set prices and provide coverage against terrorist attacks.
The Bush administration and banking and real estate executives have said that such coverage is crucial for the economy.
Bankers, for example, say they would not make loans on projects unless they were insured against terrorist attacks.
Despite their dissatisfaction, the insurers are reluctant to criticize either proposal because they would rather have some assistance than none. If debate over the plan bogs down, the insurers could be left without a decision by Congress when it recesses for Thanksgiving on Nov. 16. It is unclear whether Congress will go back into session before the end of the year.
About 70 percent of the commercial insurance policies are renewed annually in January, and insurers are saying they will not include terrorism coverage unless some way is found to limit their risks.
The insurers now expect the Senate and the House to pass their respective bills and try to work out the differences in joint conferences. The House Financial Services Committee is expected to vote on its measure on today; the Senate Banking Committee is expected to act within a few days.
So far, the insurers have no compromise plan that would meld the two approaches, but the White House initially offered a plan similar to the one being advanced by the Senate, and its influence may break the deadlock. Another aspect of the Senate plan, similar to the White House's proposal, is that the government would pay for 90 percent of the losses from a terrorist attack after the insurers paid the first US$10 billion.
Over the next several days, insurance executives and lobbyists plan to try to convince legislators of the benefits of the Senate plan. One adjustment they are seeking is to find a way to apply the US$10 billion deductible to insurance companies in proportion to their market size.
"We don't do business as a group," said Julie Rochman, a senior vice president of the American Insurance Association, a trade group. "We do business as individual companies."
The House plan, which makes insurers eligible for long-term loans after US$100 million in losses, addresses the losses of companies individually and may, in part, serve as a guide for adjusting the Senate plan, the insurers say.
The insurance industry rarely manages to present a united front. But several trade groups say they have forged an alliance with the goal of at least getting the limits of potential losses in an attack defined.
"If the industry splits," said Joseph Annotti, a spokesman for the National Association of Independent Insurers, "the chances increase of something bad getting enacted."
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