For Immediate Release
Office of the Press Secretary
April 8, 2002
Fact Sheet: Protecting American Jobs and Our Economy Against Terrorist Attacks
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
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.
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
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
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
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.