WASHINGTON — As Congress races to its lame-duck finish, time is running out on a government program that provides a backstop to private-sector insurance against terrorist attacks.
The program was enacted after the Sept. 11 attacks and has been renewed twice. The market for insurance covering terrorist attacks — which is crucial for economic sectors such as real estate, hospitality and major sports leagues — dried up after the 2001 attacks.
The program, which protects insurance companies from catastrophic losses, is credited with reviving the private market for terrorism insurance.
But the conservative chairman of the House Financial Services Committee, Rep. Jeb Hensarling, R-Texas, is demanding major changes to the program, setting up an impasse with the Senate, which is under Democratic control until next year. Hensarling's proposal has been bottled up since its party-line approval by the Financial Services panel in June. By contrast, the full Senate passed a bill to extend the program by a 93-4 vote this summer; that measure would easily pass the House if awarded a vote, but Hensarling is demanding big changes.
The program expires Dec. 31, and business groups fear a lapse would put a damper on major construction projects like skyscrapers and sports stadiums, among other things. One option, to renew the program for only a short while, is opposed by industry groups who prefer long-term certainty.
Hensarling's bill would increase the level of damages that would trigger the program from $100 million to $500 million for terrorist acts that don't involve weapons of mass destruction like nuclear or chemical weapons. He's dropped the demand to $250 million or less in private talks with Sen. Chuck Schumer, D-N.Y., but wants any final measure to adhere to House rules requiring spending cuts to pay for prospective costs to taxpayers.
An initial meeting last month between Hensarling and Schumer didn't go well, with both sides accusing the other of intransigence. But a follow-up session Wednesday went better, according to a senior lawmaker.
"They made a lot of progress yesterday," said House Majority Leader Kevin McCarthy, R-Calif., who sat in on Wednesday's meeting between Hensarling and Schumer.
The government's terrorism risk insurance offers reinsurance to insurance companies to help deal with major terrorist attacks. Insurance companies and their business allies say that the market for terrorism insurance would evaporate without the program, which would put a damper on big projects and have negative ripple effects for the economy.