The insurance industry proposal to create a mutual reinsurance pool for terrorism risks backed up by the federal government came under fire at the Senate Banking Committee today, while Treasury Secretary Paul O'Neill defended the Bush administration's proposal for direct risk-sharing between insurers and the government.
Sen. Phil Gramm, R-Texas, who is the ranking Republican on the Committee, said the industry's proposal to create a government sanctioned reinsurance "monopoly" is "totally alien to my thinking."
He called the industry's proposal a "non-starter."
Sen. Bill Nelson, D-Fla., who is the former insurance commissioner of Florida, testified that while the insurance industry faces a genuine problem, Congress should not rush in with legislation that puts taxpayer's dollars at risk.
