AP News, March 5th, 2007
At a hearing Monday just blocks from the World Trade Center site, the mayor and other New York politicians and real estate developers urged Congress to continue a law that provides insurance against terrorism.
The Terrorism Risk Insurance Act was enacted the year after the Sept. 11, 2001, attack, which caused more than $30 billion in insured losses. The law is due to expire at the end of the year, and supporters want it made permanent, or at least extended.
Failure to extend it would "itself be a disaster," said Rep. Gary Ackerman, a New York City Democrat who served as chairman of the subcommittee field hearing at City Hall.
"It would certainly result in the destabilization of the insurance industry, and in all likelihood the national economy," Ackerman said.
Critics complain the law unnecessarily subsidizes already successful developers and insurers.
As insurers worried about the likelihood and cost of another terrorist assault after 2001, they began to withdraw from writing policies for projects in New York and other major cities, and developers had trouble getting insurance against terrorism.
Congress responded with the program, a federal backstop that would share the burden of losses caused by any future acts of foreign terrorism. It was renewed in 2005 and will expire on Dec. 31.
Bloomberg said the act simply corrects a "market failure" caused by the threat of terrorism. With all the variables of terrorism _ weapons, methods, targets and timing _ insurers can't estimate the risk, he said. That means they either don't sell terrorism insurance or sell it at unaffordable prices to cover the worst case liability.
Bloomberg and New York Democratic Sen. Charles Schumer said tens of billions of dollars in new construction projects, and related economic activity, is on the line.
"Without terrorism risk insurance, none of them would ever get off the ground," Bloomberg said. "And if projects like this are put in jeopardy, so will the future of our city _ the global financial leader of America."
