Senate Seeks Consensus On Terror Backstop

Thursday, December 6th, 2001 Catastrophe Legislation & Regulation

The U.S. Senate, which had been deadlocked on the issue of a federal role in terrorism insurance, might be on the verge of reaching a consensus. The elements of a Senate bill appear to be the following: • First, insurers would be required to retain 7.5 percent of net direct written premium for any terrorism loss. • Second, for losses below $10 billion, insurers would pay 20 percent of all terrorism-related claims, while the federal government would pay 80 percent. • Third, for losses above $10 billion, insurers would pay 10 percent while the federal government would pay 90 percent. This would be a direct quota-share program with no requirement that insurers repay the government for its share of the losses.

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