President George W. Bush, speaking yesterday before a group of business and labor leaders, called on the Senate to pass legislation that will address the lack of adequate terrorism insurance faced by many businesses.
In December, the House of Representatives passed a bill that made the federal government a stopgap for terrorism insurance. Above a certain level of claim, the federal government would step in and pay. The bill is currently in the Senate and Bush is urging that group to pass it.
"We have a lack of insurance coverage now as a result of the enemy attack [on Sept. 11]," said Bush. "I don''t think they actually sat down and said, ''Gosh, if we attack, we''ll affect the insurance industry of America.'' I think that was an unintended consequence of theirs. But, nevertheless, it was a consequence."
He said Congress and the federal government must deal with the issue, and deal with it in a hurry. "Banks and investors, and others, will not finance construction projects that do not have terrorism insurance. In order to build a project, in order to employ people, you''ve got to borrow money, and you can''t borrow money unless there''s adequate terrorism insurance."
Bush met with members of a group called Coalition to Insure Against Terrorism, who are leaders from the transportation, manufacturing, real estate, construction, hotel, entertainment and retail sectors who have lost terrorism coverage or experienced huge increases in premiums since the terrorist attacks of Sept. 11, 2001. Union workers from the building construction trades whose jobs will be lost by the slowdown in construction caused by the terrorism insurance crisis attended, as did J.W. Marriott Jr., Marriott International; Nelson C. Riding, Catellus Development Corp.; David Creamer, GMAC Commercial Mortgage Corp.; James P. Hoffa, International Brotherhood of Teamsters; and Edward Sullivan, Construction Trades Department, AFL-CIO.
"Every day, businesses throughout the nation are discovering that terrorism insurance is inadequate and unaffordable, which hampers transactions, threatens thousands of jobs sustained by real estate and impedes the chances for a full economic recovery," said Real Estate Roundtable Chairman Nelson C. Rising, chairman and CEO of San Francisco-based Catellus Development Corp. "The real estate industry is encouraged by President''s Bush''s strong remarks. Congress needs to pass a terrorism insurance solution during the current session."
Bush told the group about a situation involving the Hyatt Corp. The company has a site in downtown Chicago for a 1.5 million square foot office building, but is having difficulty acquiring terrorism insurance. According to Bush, because Hyatt can''t get terrorism insurance, it''s having difficulty securing financing for the project.
"[This is] an issue because it is a jobs issue. If people can''t buy insurance on a construction project, they''re not going to build the project. And if they don''t build the project, somebody''s not working. That''s the simplest way I can describe the issue at hand," said Bush. "This project is valued at $400 million; will lead to the creation of 2,500 jobs, if the Hyatt Corp. could get insurance."
Insurers have largely stopped providing terrorism coverage under newly issued general property and casualty policies, including crucial business interruption coverage.
"It is more than a little unsettling to note that roadways, public facilities, office complexes, stadiums and crucial elements of infrastructure that are part of our daily lives are not adequately insured against terrorist attack," said Martin DePoy, a spokesperson for the Coalition to Insure Against Terrorism. "The implications are staggering."
For more information about the Coalition to Insure Against Terrorism, visit the Web site at http://www.insureagainstterrorism.orgwww.insureagainstterrorism.org.
by Sandy Smith ([email protected])