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As Congress races to its lame-duck finish, time is running out on a government program that provides a backstop to private-sector insurance against terrorist attacks.
The program was enacted after the Sept. 11 attacks and has been renewed twice. The market for insurance covering terrorist attacks —which is crucial for economic sectors such as real estate, hospitality and major sports leagues — dried up after the 2001 attacks.
The program, which protects insurance companies from catastrophic losses, is credited with reviving the private market for terrorism insurance.
“The goal of it is to keep insurance affordable and available,” Rep. Carolyn Maloney, D-N.Y., said at a news conference at which top House Democrats repeated calls for renewal of the law. “And that’s what it accomplished.”
A deal to reauthorize the program may be near after a fitful start to negotiations involving Senate Democrats and the conservative chairman of the House Financial Services Committee, Rep. Jeb Hensarling, R-Texas, who has pressed for major changes in the program. But Hensarling, under pressure from GOP leaders, has adopted a more pragmatic approach as the end of this Congress draws near.
Congressional aides say there is a framework of a potential agreement that would extend the law for six years while raising the level of damages that would trigger the program from $100 million to $200 million. The aides required anonymity because negotiations are ongoing. Extraneous issues such as GOP demands for changes to the 2010 Democratic overhaul of financial regulations still have the potential to trip things up.
The Senate passed a bill to extend the program by a 93-4 vote this summer but Hensarling’s alternative, which would increase the level of damages that would trigger the program to $500 million for terrorist acts that don’t involve weapons of mass destruction like nuclear or chemical weapons, has been bottled up since being sent out of his committee on a party-line vote.
The program expires Dec. 31, and business groups fear a lapse would put a damper on major construction projects like skyscrapers and sports stadiums, among other things.
One option, to renew the program for only a short while, is opposed by industry groups who prefer long-term certainty.
An initial meeting last month between Hensarling and Sen. Chuck Schumer, D-N.Y., didn’t go well, with both sides accusing the other of intransigence. But a follow-up session Wednesday went better, according to a senior lawmaker.
“They made a lot of progress yesterday,” said House Majority Leader Kevin McCarthy, R-Calif., who sat in on Wednesday’s meeting. It’s not the first time GOP leaders have intervened in matters before Hensarling; earlier this year, then-Majority Leader Eric Cantor, R-Va., waded into Hensarling’s turf to guide talks to rewrite tough new flood insurance standards.
“We’re making progress,” Hensarling said.
The government’s terrorism risk insurance offers reinsurance to insurance companies to help deal with major terrorist attacks. Insurance companies and their business allies say that the market for terrorism insurance would evaporate without the program, which would put a damper on big projects and have negative ripple effects for the economy.
“This bill has to pass,” said Rep. Joe Crowley, D-N.Y.