With the U.S. Congress adjourning for the year, there will be no terrorism risk pool in place as insurers head into the new year, when most commercial policies come up for renewal. Congress gave up the ghost when the U.S. Senate failed to bring a measure to the floor before the holiday break yesterday. The effects of the move are up for speculation, with predictions that insurers will deny coverage for terrorism risk, a particularly harmful move for the construction/development industry, manufacturers and the energy industry. How this situation will impact lending practices to these industries is also in question. Should commercial clients be able to find coverage, certainly cost would be an issue. The National Association of Insurance Commissioners has already said it will approve insurer exclusion for some commercial business in light of Congress’ inability to deal with the issue. “Absent federal assistance, many businesses will be without coverage for future losses related to acts of terrorism. In the event insurance is still available, the costs may be unaffordable for many,” wrote NAIC president and Iowa Insurance Commissioner Terri Vaughan in a letter to Congress last week. Despite the NAIC’s urging, Congress was unable to come up with a solution. Although the House of Representatives has put into place a system of loans for insurers to pay claims for possible future terrorist attacks, and there appears to be agreement between Democrats and Republicans on the need for a government backstop program for insurers. However, the issue of liability, specifically the Republican call for any bill to bar punitive damage awards to terrorist attack victims and block other liability costs such as lawyers’ fees, has produced a deadlock. There is also an issue of conflict between the proposed Senate bill, which would see insurers pay the first $10 billion in claims, and the government paying 90% of claims beyond that, and the House bill. The House requires insurers to pay only the first $1 billion, but government excess coverage would be only a loan, to be repaid by insurers.