Today's the Day for Terrorism Insurance Law

WASHINGTON, DC-Terrorism insurance legislation finally made it to the desk of the president, who signed the Terrorism Risk Insurance Act of 2002 today, thus putting in place a federal backstop for property insurers in the event of another terror attack. Under the new legislation, the government will pick up 90% of the tab beyond the $10-billion mark in terrorism-related claims. The law covers a three-year period–with the kick-in point increasing from $10 billion to $12.5 billion in 2004 and to $15 billion in 2005–and carries an annual cap of $90 billion. Also stipulated in the legislation is the setting of insurance company deductibles at 7% of premiums the first year, then 10% and 15% in the second and third years.

In recent months, President George W. Bush had joined the cry–initiated by representatives from the real estate, insurance, construction and development industries–for Congress to pass a law that would reverse the drastic monetary losses caused by the pervasive unavailability of property insurance in the wake of last year’s attacks. “The risk of terrorism has had a profound effect on potential development and construction,” Eric T. Schake of risk and insurance services firm Marsh Inc. tells GlobeSt.com. “This has not only affected real estate owners developers, and construction companies but also construction laborers, unions and the entire US Economy.” Insurance companies have been left with an estimated $70 billion bill for Sept. 11-related claims. The situation led to outrageously high-priced coverage–or no coverage at all–which resulted in billions of dollars in canceled and stalled development projects.