Congress Passes Terrorism Insurance Legislation: President Bush Expected to Sign Early Next Week
By Joshua H. Sternoff and Nicole K. Watson
On November 19, 2002, the U.S. Senate passed the Terrorism Risk Insurance Act of 2002, which had been adopted by the House of Representatives a few days earlier. President Bush is expected to sign the Act into law early next week. The Act provides a federal program intended to spread the risk of loss in the event of future terrorist attacks, among the federal government, insurers, and policyholders. The legislation comes after a year of heavy lobbying by the real estate, banking and insurance industries, among others. The Act is welcomed by these industries and is expected to restore some certainty to the markets, as it is hoped that the Act will result in affordable terrorism-related coverage and jumpstart real estate projects delayed or stalled for want of coverage. It is also hoped that the Act will reduce pressure from the rating agencies, which have lowered credit ratings on prominent properties that were unable to secure adequate terrorism coverage, resulting in increased borrowing costs. What follows is an overview of the key provisions of the Act.