WASHINGTON (AP) – President Bush signed legislation yesterday that will “get our economy back on its feet” should another terror attack saddle the insurance industry with catastrophic costs.
“With this new law, builders and investors can begin construction in real estate projects that have been stalled for too long, and get our hard hats back to work,” Bush said in an East Room bill-signing ceremony, his second in two days. “We’re defending America by making America more secure.”
Under the bill, the government wouldn’t step in on any claims less than $5 million. Insurance companies would pay a deductible in 2003 equal to 7 percent of the premiums they received the previous year. The deductible would rise to 10 percent in 2004 and 15 percent in 2005. The federal government would then cover 90 percent of everything above the deductible with insurance companies paying the other 10 percent.
Bush said he was tacking on a regulation to “make sure no taxpayer dollars will be spent on legal settlements without the approval of the secretary of the Treasury.” The secretary will have to approve any settlements involving government reimbursements, White House officials said. The criteria by which such settlements will be judged was not clear yesterday.
The president created the Homeland Security Department on Monday.
The terrorism insurance bill had been a top priority for the president since shortly after the Sept. 11 attacks. From the White House and from the campaign trail, Bush argued that the inability of companies to get affordable insurance for large construction projects was costing the economy thousands of jobs.
The GOP’s success in this month’s midterm elections gave Bush leverage to insist that Congress complete the bill in the lame-duck session before adjourning for the year. The bill passed by a wide margin, with the main opposition coming from Republicans.
“Should terrorists strike America again, we have a system in place to address financial losses and get our economy back on its feet as quickly as possible,” he said.
Federal payments would be capped at $90 billion the first year, $87.5 billion the second year and $85 billion in the final year of the program.
The law does not cover the Sept. 11 attacks, which generated an estimated $40 billion in claims.
The president bowed to Democratic demands for unlimited punitive damages in civil lawsuits related to terror attacks, which many Republicans consider a boon to trial lawyers usually allied with Democrats. But GOP leaders vowed to take up the issue again next year, when they again will have majorities in the House and Senate.