Tuesday, 18 September 2007
Bush Likely To Veto Terrorism Insurance Backstop Bill
The United States House of Representatives recently approved a bill to expand the legislation that provides a federal backstop for insurance companies in the event of a catastrophic terrorist attack. The current terrorism reinsurance program, the Terrorism Risk Insurance Act, would be extended 15 years, with added group life insurance and coverage for domestic terrorism.
But these new provisions have prompted recommendations from senior advisors to President George W. Bush that he veto the bill if it came to his desk — but it first must be approved by the U.S. Senate.
“Adding these insurance coverages to the federal reinsurance backstop sends the wrong signal to the marketplace, which instead should be encouraged to find new ways to diversify the risks of doing business,” said one White House senior advisor.
This position of the White House is consistent with their healthcare policy, which wants to minimize the government’s role in the insurance industry.
But proponents of the bill contend that expanding the terrorism reinsurance program is necessary for the economy and quickly rebuilding business.
“Businesses in cities and towns, large and small, from coast to coast would under this proposal be able to purchase terrorism risk insurance more readily, secure in the knowledge that the protection will remain available for many years to come,” said Insurance Information Institute president, Dr. Robert Hartwig.
The current program will expire on Dec 31, 2007 if U.S. Congress does nothing.
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