|Maryland Programs Proceed,
With or Without Terrorism Insurance Protection Bill |
By David M. Pittman
Capital News Service
Friday, Nov. 22, 2002
WASHINGTON - When Congress this week pledged
up to $100 billion to support insurance companies in case of future
terrorist attacks, the measure was aimed at spurring huge construction
projects that had been stymied by a lack of coverage.
But Maryland officials were hard-pressed to find even one project delayed
for that reason.
They said no economic development or construction projects have been hurt
by unavailable or unaffordable terrorism coverage, and they could not think
of a business that has been deterred from settling or expanding in the
"That has not come up as an issue of concern," said Tori Leonard, a
Maryland Department of Business and Economic Development spokeswoman. "The
outlook is positive for planning and adding jobs."
Critics of the bill had made that argument all along, saying the
legislation was useless and wasteful and that large insurance firms should
be able to cover the costs of an attack.
"The bill never started as a bill to help the problem," said Bob Hunter,
director of insurance for the Consumer Federation of America. "It's a
bailout for the insurance industry. It's not affecting construction
But a spokesman for the Alliance of American Insurers praised the bill.
"This is not a give away. This is not a buyout. This is a shared
program," Roger Morris said.
The Senate gave final approval to the bill late Wednesday and sent it to
President Bush, who has promised to sign. It marks the end of a yearlong
battle to protect insurance companies from potential bankruptcy in the wake
of another massive terrorist attack.
After Sept. 11, the foreign "reinsurers" that provide backing for many
American insurers withdrew support for terrorism coverage, forcing many
companies to dramatically increase premiums on coverage they used to toss in
to policies for free.
The bill puts the federal government in the role of reinsurer, committing
it to footing up to 90 percent of the claims from terrorist attacks, up to
$100 billion. It would only apply when an attacks caused at least $5 million
Morris said the bill is needed because there are so many problems with
the business of terrorism insurance. While health and flood insurance can
use risk models to determine eligibility and premium rates, there is no way
to predict terrorism.
"You can model those fields and predict your losses. There's none of that
for terrorism. It's totally unexpected," Morris said.
But opponents said insurance companies are getting help for a problem
they can afford to fix themselves. Hunter said insurers will get rich off
the premiums they collect, while absorbing none of the costs.
"For them, that's pretty cool. But for taxpayers and businesses paying
premiums, it's not," he said.
There have not been any delays linked to terrorism insurance at the
Washington region's highest-profile construction project, replacement of the Woodrow Wilson
Bridge. But a spokesman for the project welcomed the insurance
"There are so many factors that go into a bid, but it (the bill) can only
have a positive effect," said John Undeland, spokesman for the Wilson Bridge
Project. "It's just an element of risk that we have to look out for."
Terrorism coverage has not been a problem for the State Highway
Administration, which self-insures its bridges, tunnels and roads, said
spokeswoman Kelly Boulware.
"Because we have so many miles, it would incur a great cost to try and
insure them with a separate policy," she said.
Boulware said that none of the state's current projects have been
postponed because of lack of terrorism coverage.
University of Maryland College of
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