Third, a wide range of business groups–absent insurance associations–have formed a coalition to get a federal terrorism reinsurance backstop passed.

The release of the GAO report in particular promises to be a major event. When Congress returned from its recess last month after having adjourned in December without passing a terrorism reinsurance bill, it was made clear that lawmakers needed hard facts before they would reconsider the issue.

Last year, insurers warned Congress that without a federal backstop, commercial insureds would be left facing huge exposures, while economic activity in certain segments–such as construction of high-rise office buildings–could come to a halt. But this year insurers were put on notice that Congress needed more than vague threats or purely anecdotal evidence.

That's where the GAO report comes in. If GAO backs up half of the industry's dire predictions, Congress should have the justification they need to at least reopen serious debate.

Meanwhile, the formation of the Coalition to Insure Against Terrorism should give the insurance industry's cause a big lift. This is indeed a heavyweight group, as participating players include the National Association of Real Estate Investment Trusts, the National Association of Manufacturers, the National Association of Realtors, the National Association of Home Builders, and the U.S. Chamber of Commerce.

The fact that no insurance groups were charter members of the coalition could work to the industry's advantage. If insurance groups were to participate directly, the coalition's efforts might seem too self-serving.

So, it does seem to be now or never in the debate over terrorism reinsurance. With a coalition of major business groups pushing Congress to act, and with a GAO report hopefully supporting the insurance industry's case that lack of terrorism coverage has placed the economy at risk, Congress should have no choice but to act, especially in an election year.

However, even if all the pieces fall into place to push Congress into action, there is no guarantee of quick passage, let alone passing a bill that the insurance industry likes. After all, last year the House and the Senate took very different approaches–with the former backing loan guarantees (which the industry does not want), and the latter debating a more traditional quota-share arrangement that got tripped up over tort reform proposals.

So no matter what happens, insurers and risk managers have their work cut out for them if they hope to prompt Congress to do what is necessary to restore order to the rattled reinsurance market and the sputtering economy.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 25, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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