Canadian Underwriter

U.S. government at odds on insurance package

November 2, 2001   by Canadian Underwriter

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A deal to assist America’s insurers with temporary reinsurance coverage for terrorism has put the country’s Senate and House at odds. Both bodies released proposals for a new package, but the differences could lead to a stalemate, which would put insurers in a bind as they attempt to negotiate treaties for January 2002.
The Senate plan, supported by the White House, would see insurers paying the first US$10 billion of future terrorism liability, with the government paying 90% of claims beyond that. Under the plan, insurers would not be able to exclude terrorism coverage from traditional property policies.
The House plan, introduced by Republican members Michael Oxley and Richard Baker, sees insurers with a smaller deductible and the government paying 90% of the first US$20 billion in claims. Insurers would be expected to pay back this government funding over time. The insurance industry has pushed to have companies pay specific deductibles, a factor in the House plan.
The fear now is that it will be well beyond the U.S. Thanksgiving and into December before a deal is reached, leaving many companies up in the air in terms of negotiating reinsurance coverage for the new year. The American Insurance Association has said that a deal needs to be in place by Thanksgiving to give insurers the necessary time.

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