US Congress passes terror insurance bill providing for 90% govt cover

The Senate approved a bill to provide government coverage of insurance losses from terrorist attacks, giving final clearance to the measure sought by the Bush administration since October 2001.

"Today's passage of the terrorism insurance conference agreement represents a major step toward strengthening and improving the US economy," said Treasury Secretary Paul O'Neill in a statement following the Senate vote.

The bill, which still must be signed by President George Bush before becoming law, will also "minimise negative economic consequences of possible future attacks" by terrorists against the US, O'Neill said.

The legislation was passed by the House of Representatives last week.

The bill provides government coverage of 90% of insurance losses from a terrorist attack over the next three years, beyond an initial $10 billion (€9.99b), which would be paid for by the insurance industry.

The Bush administration has said the legislation would allow $15.0 billion (€14.9b) worth of construction projects to proceed. The projects are currently suspended due to lack of insurance against terrorist attacks, and going forward with them would create 300,000 new jobs.

"This passage is a victory for people seeking jobs and communities seeking to grow," O'Neill said.

The Sept 11, 2001 terrorist attacks led to the largest losses ever for the US insurance industry - officially estimated at up to $54.0 billion (€53.9b).

Property insurance costs for terrorist risks became prohibitively expensive afterwards, as the insurance industry was unable to price for the risk of another attack.

The bill became tied up from late last year over Republican-led efforts to limit liability by property owners and developers for losses from terrorist attacks.

An agreement was reached between Republican and Democrat negotiators, along with White House officials, last month.

The deal allowed some capping of liability, and provided for consolidated lawsuits to be filed in federal, not state courts. Federal courts are seen as less likely to make big awards to plaintiffs, analysts say.