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 Home > News & Policies > April 2002

For Immediate Release
Office of the Press Secretary
April 8, 2002

Fact Sheet: Protecting American Jobs and Our Economy Against Terrorist Attacks

Presidential Action

  • President Bush today called on the Senate to vote on terrorism insurance legislation to protect American jobs and our economy from future terrorist attacks.

  • Last fall the House of Representatives passed legislation to ensure that another terrorist attack would not devastate our economy. Under this legislation, private insurance would pay for damages up to a certain amount, and the Federal government would guarantee against catastrophic losses.

  • This legislation would help create jobs, strengthen economic growth, reduce the impact of any future terrorist attack.

  • The Administration has worked in a bipartisan fashion with the Senate on this legislation but the full Senate has yet to take the measure up for a vote.

  • This legislation is important because right now hospitals, office buildings, malls, stadiums and museums -- among many other facilities -- are all having difficulty finding terrorism coverage. Without coverage the economic impact of another terrorist attack would be very serious. The U.S. could face a string of bankruptcies, loan defaults and layoffs that would intensify the blow of the attack.

    Background Information

  • Events of September 11 Caused Major Insurance Industry Losses: Estimates range from $36 billion to $54 billion. As a result, the reinsurance industry (not legally obligated to cover terrorism) has generally stopped covering terrorist acts. Forty-five states (covering about two-thirds of commercial insurance) have allowed primary insurers to also exclude acts of terrorism from property and casualty coverage. Even with the state exclusions, premiums for property and casualty insurance increased approximately 30 to 50 percent in the wake of the attacks.

  • New Job-Creating Projects are Being Delayed or Cancelled: Banks and other lenders will not lend to construction projects that do not have adequate insurance coverage. This has slowed the pace of new construction projects. For example, one prominent developer has been unable to obtain financing for a $2 billion project due to lack of insurance; once financing is obtained, the project will provide 16,000 jobs. Overall, nonresidential construction has not picked up recently like other areas of the economy. In February, nonresidential building construction was down 3 percent compared with January of 2002 and down 19 percent compared with February of 2001. Delayed or cancelled work on new construction projects costs American jobs.

  • Workers' Compensation Insurance Becoming More Difficult to Provide: State laws do not allow companies offering workers' compensation insurance to exclude terrorism risk. As a result, some insurers are not writing workers' compensation policies for large employers, a move which forces the employer to go to several companies to cover all of its workers or to its state-sponsored insurance pool. This situation has led to significantly increased workers' compensation premiums.

  • Higher Premiums and Lending Costs Act As Job-Killers: Existing properties either lack terrorism coverage or are paying higher rates for more limited coverage. The problem is particularly acute for symbols of America (e.g., the Mall of America), structures for large gatherings (stadiums), critical infrastructure (major bridges) and power plants. Some properties without adequate insurance are technically in default of their mortgages, and lenders may have to raise their fees to compensate for added risks. These increased premiums and higher lending costs are squeezing businesses across the country.

  • Lack of Insurance Makes us More Vulnerable to Future Terrorist Attacks: Without private insurance coverage, the impact on the economy of another terrorist attack would be more serious. Private insurance absorbed the losses from September 11 and made prompt payments, calming investors and giving businesses the confidence needed to resume operations. If the event of another attack, uninsured businesses and investors would either need to absorb losses themselves, or wait for the Federal Government to act. A Federal payment system, hastily conceived in the aftermath, likely could not perform as well. Even if the Federal Government provided financial assistance, the uncertainty that would exist between the time of an event and any subsequent federal action could lead to bankruptcies, layoffs and loan defaults.