Sen. Christopher J. Dodd (D-Conn.), who will become banking committee head in the new Congress, says he would like to see federal backstop coverage for terrorism-related claims made permanent and plans to work on such legislation next year. The current program, established by the 2002 Terrorism Risk Insurance Act, was extended in 2005, but is set to expire at the end of 2007.
Dodd, who will take the chair thanks to the Democrats' recently won Senate majority, told reporters at a Dec. 7 press conference, "I will not do another extension." He added, "My goal here is to establish a permanent piece of legislation, not a temporary one."
He said,"For a wide range of financial interests in the country, this has been critically important—and has worked, by the way." Dodd said he has asked the insurance and real estate industries to see if they can reach "common ground" on concepts for new legislation.
Dodd, who will take over from outgoing committee chairman Richard Shelby (R-Ala.), said he wants to start work on the terrorism insurance legislation "fairly early" next year. He said, "I don't want to wait until the fall [and be] down to the crunch time and trying to get it done."
Under the current program, the federal government this year pays 90% of losses from terrorism events above insurers' deductibles. The threshold declines to 85% in 2007. The 2006 deductible equals 17.5% of an insurer's previous-year premiums in certain lines of business. The percentage rises next year to 20% of premiums. The combined federal-industry liability is capped at $100 billion.
Some types of insurance aren't covered by the backstop, including surety, commercial automobile, burglary and theft.
The panel, whose title is the Banking, Housing and Urban Affairs Committee, also has jurisdiction over mass transit policy. Dodd says that among his priorities as chairman will be to get a transit security measure out of committee.