Sources told National Underwriter that the base text will likely track a tentative agreement that was reached last year creating a three-tiered approach to federal terrorism reinsurance.

The first tier would be an industry retention level. The second tier, which would take effect for losses above the retention, would be a federal loan program. The third tier, covering substantial losses, would be a quota-share arrangement in which the government would pay most of the claims from a terrorist event without a requirement that the industry repay the government.

Details were not available at press time on the trigger levels for each tier.

As for the critical issue of tort reform, the Congress Daily article said that the base measure is silent, except for language stating that taxpayers should not be liable for claims against the government.

If the legislation makes it to the floor, Democrats and Republicans would each be allowed to offer two amendments to the bill. Presumably, those seeking strict tort reform provisions would have the opportunity for a straight up-or-down vote in one of those amendments.

Industry sources told National Underwriter, however, that they are not very optimistic that the legislation will move, despite the Congress Daily article. They say disagreements over tort reform still seem to be a roadblock preventing the bill from reaching the floor.

The House approved a bill last November that would offer loans to insurers to help pay terrorism-related claims. But the Senate version, which called for a quota-share program, was bogged down by tort reform provisions.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, April 29, 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.