Bush wants terror safety net for insurers
WASHINGTON (CNN) -- President Bush urged the Senate Monday to pass legislation to provide a safety net to insurers covering projects hit by terrorism, a move that consumer groups said is unnecessary.
In a speech to labor leaders, Bush said the pace of new construction has dropped dramatically since the September 11 attacks, in part because builders cannot find insurance coverage for terrorist attacks. Non-residential construction is down 17 percent from February 2001 levels, he said
"Banks and investors and others will not finance construction projects that do not have terrorist insurance," he said. "You can't borrow money unless there's adequate terrorism insurance, and that's not being provided today."
The Hyatt Corp. recently acquired a site for a 1.4-million-square-foot office building in downtown Chicago, he said. The $400 million project would create 2,500 jobs, he said.
"But they got a problem finding terrorism coverage, and so they're not getting financing for the project," Bush said.
A $2 billion resort in Nevada that would provide 16,000 jobs is on hold because developers can't get insurance for terrorism, he said.
In addition, Bush said, the high cost of insurance may force charities to cut services to the needy, and cause teachers' pension funds to lower their rates of return.
A bill passed last fall in the House made the federal government liable for insurance claims caused by big terror attacks. But the bill stalled in the Senate.
"I expect, for the good of our economy and the good of the country, that the Senate act," Bush said.
The Consumer Federation of America dismissed Bush's plea as a bailout for an industry that doesn't need one.
"We think it is a bad idea to put taxpayers on the hook for billions of dollars in losses when we have an insurance industry that's actually doing quite well," said Travis Plunkett, legislative director of the consumer education and advocacy group whose 300 member organizations claim a combined membership of 50 million Americans.
The insurance industry is having one of its best years ever, having brought in more than $24 billion since the September 11 attacks, which will cost them about $23 billion, he said.
"The point here is that the industry is in good shape financially and can pay out terrorism losses. What we need is the president to focus on some price gouging that's going on," Plunkett said.
But, he said, some targeted solutions for "trophy" properties such as the Golden Gate Bridge and skyscrapers in Manhattan may indeed be needed.
"We have acknowledged there are problems. The question is do they rise to the level of a broad taxpayer bailout leaving taxpayers on the hook for tens of billions of dollars? These problems limited and sporadic and we don't need a bailout," Plunkett said.
A spokeswoman for the Insurance Information Institute, a trade association, said the bill would provide much-needed relief. With the potential for big losses from terrorist acts now a real threat, the industry is facing new challenges, she said.
"The insurance industry has never priced something like this before, so we have to set some guidelines," said Loretta Worters, the institute's vice president for communications. "It's not a matter of gouging. It's a matter of our industry trying to price this accordingly."
No insurers have gone out of business as a result of the terror attacks, she said, though some have been unable to lay off risk to reinsurers.
ALLPOLITICS TOP STORIES:
Karzai to U.S.: 'Stay with us'
Coast Guard joins Homeland Department
Frist offers hope to governors
Suit alleges hostility to Hispanic voters
CBS: Saddam challenges Bush to debate
|Back to the top|