Legislation to provide federal funds to help insurers deal with terrorism-related claims has advanced on Capitol Hill. The House approved a measure establishing the insurance "backstop" on Nov. 14 by voice vote. But the Senate still must approve the measure. It was to take up the bill on Nov. 15, but Sen. Phil Gramm (R-Texas) was able to delay floor action.

President Bush, real estate, insurance and other industry groups have been lobbying for the bill. Under the legislation, the Treasury would cover 90% of terrorism claims when an insurer's exposure exceeds 7% of its commercial premiums in 2003, 10% of premiums in 2004 and 15% in 2005. It caps total annual terrorism-related liability at $100 billion.

The measure also says that the federal assistance wouldn't have to be repaid if total industry terrorism claims are more than $10 billion in 2003, $12.5 billion in 2004 and $15 billion in 2005. Below those thresholds, insurers would have to reimburse the Treasury for its aid by imposing surcharges of up to 3% on their commercial premiums.

Jeffrey DeBoer, president and chief operating officer of the Real Estate Roundtable, says, "By helping to stimulate expanded capacity in the terrorism insurance marketplace, this bill will remove a significant obstacle to real estate market activity and improve our industry's ability to weather ongoing economic uncertainty."