BOND FLOOR STATEMENT ON THE TERRORISM RISK INSURANCE ACT
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June 13, 2002
Mr. President, I rise to speak on the pending legislation concerning terrorism reinsurance. Last December--December 13, I believe--I spoke here urging the leadership to bring up bipartisan legislation that was at the time being negotiated between the White House and the Senate Banking Committee. Unfortunately, the legislation before us today does not reflect those discussions. At that point, I thought we had a good start on a bipartisan terrorism reinsurance effort.
The availability and affordability of insurance is vital to the stability of our Nation's economy. Now that we know terrorists can and have struck in the United States, and have struck against major buildings, insurance is going to have to change because the insurance is going to have to cover risks that were never before recognized as being legitimate in this country.
We hear reports from all over that many insurance and reinsurance companies are no longer able to provide the insurance coverage that is necessary for builders of buildings, for those owning buildings, to get the kind of financing they need or to have the protection they need for the resources they put into those buildings.
At this moment, affordable terrorism risk insurance is not attainable by many businesses, both small and large--apartment and condominium buildings, shopping centers, as well as many cultural institutions. Recently, the St. Louis Art Museum was identified by the Joint Economic Committee as not being able to afford terrorism insurance. As a result, the museum is not covered. I am positive there are many entities across the country facing the same situation as the museum. I know major sports facilities, including ones in my State, are in a position where they cannot get the terrorism risk insurance they would need to add new construction, or even to continue their operations. The fact that terrorism has struck our country has a double impact now that we are in a position where insurance companies are not able to write and insure against and to ascertain the level of insurance risk that might be brought about by terrorist acts. It is unacceptable that we hold large segments of our economy hostage to the acts of terrorists.
Right now, many small business and small property owners are at disadvantages. They face the prospect of doubling and tripling insurance premiums. They are not only faced with increased property insurance costs, but they are facing workers' compensation insurance costs, health insurance costs; and without affordable insurance, many small businesses and property owners are simply forgoing insurance. That is bad business. Those that have elected to pay much higher insurance costs are finding they have to pass this cost along to their customers, renters, leaseholders, and others. This could have a tremendous impact on our economy.
We are hearing about major construction projects coming to a halt across the country as lenders and major financing institutions are seeking, but unable to get, terrorism risk insurance. The Bond Market Association has stated that more than $7 billion worth of construction projects are on hold or have been canceled due to the lack of affordable terrorism risk insurance.
Rating organizations have issued warnings in the past 2 weeks that large securitizations are in jeopardy of being downgraded. We are trying to get out of a recession. The economic recovery that we expect and that we need is in grave danger if we do not provide a means of reinsuring the risk that has now become a reality in this country with possible terrorist acts. This is an unknown at this point, and this is the time, and this is something in which the Federal Government could play a very significant role. That is why good terrorism risk reinsurance legislation must be provided.
I also agree with my colleague from Kentucky that businesses that are victimized by terrorist attacks should not be subject to punitive damages. Now, unfortunately, on a party line vote, we rejected the standard my colleague proposed. I hope we can find other means of compromise to ensure that a business owner or a business that is struck by a terrorist act is not also struck by a punitive damage action that could be economically as devastating as a terrorist act.
We cannot and should not hold our major economic engines hostage to the threat of punitive damages on top of a terrorist act. I hope we can agree on a means of avoiding this kind of risk to those who have businesses or property that might be subject to a terrorist attack. As I said back in December, this is a potential problem. I believe now it is a problem. I think our recovery from the economic downturn, the recession, has been slowed because the business community--especially small businesses from which I hear--are really in a position where they cannot go forward and, in many instances, they cannot get financing without terrorism insurance, and most insurance companies are not in a position to offer that.
So I hope we can move with a good piece of legislation that will provide the temporary reinsurance by the Federal Government to allow us to get back to the normal business of building facilities, building shopping centers, operating cultural facilities, and conducting business.
Mr. President, I look forward to working with my colleagues. I hope we can get a good product, and I hope we can do it very quickly so we can get our economy moving again.
I thank the Chair.
The availability and affordability of insurance is vital to the stability of our Nation's economy. Now that we know terrorists can and have struck in the United States, and have struck against major buildings, insurance is going to have to change because the insurance is going to have to cover risks that were never before recognized as being legitimate in this country.
We hear reports from all over that many insurance and reinsurance companies are no longer able to provide the insurance coverage that is necessary for builders of buildings, for those owning buildings, to get the kind of financing they need or to have the protection they need for the resources they put into those buildings.
At this moment, affordable terrorism risk insurance is not attainable by many businesses, both small and large--apartment and condominium buildings, shopping centers, as well as many cultural institutions. Recently, the St. Louis Art Museum was identified by the Joint Economic Committee as not being able to afford terrorism insurance. As a result, the museum is not covered. I am positive there are many entities across the country facing the same situation as the museum. I know major sports facilities, including ones in my State, are in a position where they cannot get the terrorism risk insurance they would need to add new construction, or even to continue their operations. The fact that terrorism has struck our country has a double impact now that we are in a position where insurance companies are not able to write and insure against and to ascertain the level of insurance risk that might be brought about by terrorist acts. It is unacceptable that we hold large segments of our economy hostage to the acts of terrorists.
Right now, many small business and small property owners are at disadvantages. They face the prospect of doubling and tripling insurance premiums. They are not only faced with increased property insurance costs, but they are facing workers' compensation insurance costs, health insurance costs; and without affordable insurance, many small businesses and property owners are simply forgoing insurance. That is bad business. Those that have elected to pay much higher insurance costs are finding they have to pass this cost along to their customers, renters, leaseholders, and others. This could have a tremendous impact on our economy.
We are hearing about major construction projects coming to a halt across the country as lenders and major financing institutions are seeking, but unable to get, terrorism risk insurance. The Bond Market Association has stated that more than $7 billion worth of construction projects are on hold or have been canceled due to the lack of affordable terrorism risk insurance.
Rating organizations have issued warnings in the past 2 weeks that large securitizations are in jeopardy of being downgraded. We are trying to get out of a recession. The economic recovery that we expect and that we need is in grave danger if we do not provide a means of reinsuring the risk that has now become a reality in this country with possible terrorist acts. This is an unknown at this point, and this is the time, and this is something in which the Federal Government could play a very significant role. That is why good terrorism risk reinsurance legislation must be provided.
I also agree with my colleague from Kentucky that businesses that are victimized by terrorist attacks should not be subject to punitive damages. Now, unfortunately, on a party line vote, we rejected the standard my colleague proposed. I hope we can find other means of compromise to ensure that a business owner or a business that is struck by a terrorist act is not also struck by a punitive damage action that could be economically as devastating as a terrorist act.
We cannot and should not hold our major economic engines hostage to the threat of punitive damages on top of a terrorist act. I hope we can agree on a means of avoiding this kind of risk to those who have businesses or property that might be subject to a terrorist attack. As I said back in December, this is a potential problem. I believe now it is a problem. I think our recovery from the economic downturn, the recession, has been slowed because the business community--especially small businesses from which I hear--are really in a position where they cannot go forward and, in many instances, they cannot get financing without terrorism insurance, and most insurance companies are not in a position to offer that.
So I hope we can move with a good piece of legislation that will provide the temporary reinsurance by the Federal Government to allow us to get back to the normal business of building facilities, building shopping centers, operating cultural facilities, and conducting business.
Mr. President, I look forward to working with my colleagues. I hope we can get a good product, and I hope we can do it very quickly so we can get our economy moving again.
I thank the Chair.
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