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Within days of the events of Sept. 11, 2001, the insurance industry strongly and unsuccessfully pushed Congress for a bill to cover future terrorism attacks. More than a year later, the industry finally prevailed, with congressional passage of the Terrorism Risk Protection Act last week. Some leading figures in insurance lobbying, such as the American Insurance Association, had an important hand in the victory. But one of the strongest factors in the legislation’s success was a powerful and tightly choreographed effort by affected industries to back the insurance industry’s demands. The winning message: In the age of insecurity, it’s not really the insurance industry that most needs government-backed terrorism coverage. It’s the companies that buy the insurance that are most at risk. Business created a 67-member group — and called it the Coalition to Insure Against Terrorism. It was a Washington players list. The steering committee consisted of of eight groups — the National Association of Real Estate Investment Trusts, the Real Estate Roundtable, the U.S. Chamber of Commerce, the National Association of Manufacturers, the Financial Services Roundtable, the National Football League, Marriott International, and Host Marriott. “We weren’t looking to upend each other or self-promote ourselves,” says Jeffrey Kurzweil, a Venable lobbyist who represented the Marriott and Hilton hotels and was on the business coalition’s steering committee. “We all knew if we didn’t succeed in this, there was going to be considerable harm for all.” The second factor was President George W. Bush, who lobbyists say got involved in details, setting deadlines and forcing deals, to get it passed. “At almost every level, where things were supposed to flow smoothly, doors were closed to us,” says Clifton Rodgers Jr., senior vice president of the Real Estate Roundtable. “At every dead-end alley, the president would open the doors and get us to the next level.” Even those who opposed the legislation say it was a successful campaign that garnered almost everything proponents wished for. “I credit the real estate industry with creating the false impression that terrorism insurance had led to a serious economic drag,” says Travis Plunkett, legislative director of the Consumer Federation of America. “Their bragging is well-deserved. They are wrong, but they did turn the issue around.” GOVERNMENT’S HELPING HANDS The legislation passed by Congress this month is a “backstop.” For the next three years, the government will cover the costs of insurance claims from terrorism in certain circumstances. Under the bill, an insurance company will have to cover a certain amount of any claim; the rest will be picked up by the government. For the first year, the companies will have to cover an amount equal to 7 percent of their previous year’s premiums, rising to 10 percent in the second year, and to 15 percent in the third. The law also caps the government’s total payout at $100 billion. The House approved the conference version of the bill Nov. 14, and the Senate approved it Nov. 19. President Bush is scheduled to sign the bill Nov. 26. The legislation is very different from the measure first passed last year. The House of Representatives moved quickly in November 2001 to essentially create a one-year loan program for insurance companies. Buoyed by the swiftness of the House, insurance industry lobbyists began to entertain visions of a law before the holiday recess. “When the House bill passed, I was very confident that we would get something,” says Peter Bizzozero, assistant vice president of federal affairs for the National Association of Professional Insurance Agents. “We had high hopes the Senate would follow quickly.” But those hopes were quickly shown to be illusions. The House had made tort reform provisions part of the bill, which upset the Democrat-controlled Senate. The Senate and the Bush administration backed a different approach than the House bill, and the process started anew. Insurance and business interests asked that Congress put some measure in place by Jan. 1, 2002, which was the time when many policies were coming up for renewal. Failing to act would bring serious economic trouble, the insurance industry argued. The deadline came and went, without discernible financial upheaval. It was at that point that various affected industries created a group to drive the bill forward — the Coalition to Insure Against Terrorism. NEW BUSINESS MODEL “The insurance industry maybe oversold that point and maybe made it seem the economy would come to a grinding halt,” says Andrew Barbour, a lobbyist with the Financial Services Roundtable. “When that didn’t happen, I think it became very important for the insurance industry to take a step back and policyholders to take a step forward.” The lobbying effort to that point had been dominated by groups like the American Insurance Association. Some affected industries had been working on the issue, but they were not the public face. The coalition soon became very prominent. “The business community has really pulled its weight on this issue,” says Julie Gackenbach, assistant vice president of the National Association of Independent Insurers. “They kept this up — they had very high-level senior executives keep picking up the phone and saying, ‘I really need this legislation.’ “ The eight-member steering committee drove the campaign. Strategy meetings were held every Tuesday at 4 p.m. in the I Street offices of the National Association of Real Estate Investment Trusts. President Bush also helped the campaign, making it an issue he raised in his weekly radio address and in speeches. And it was Bush who brokered the final deal. The White House eventually agreed to give up the tort reform provisions in the bill to get the approval of Senate Democrats. It was not an agreement that pleased House Republicans, nor even all supporters of the bill. “We were very concerned that the liability provisions and punitive damages were not kept in the final version,” says Brian Crawford, legislative director for Associated Builders and Contractors, a coalition member. But now most of the industry and those who supported it are pleased with the outcome. “Our entire focus was to increase the capacity and ability of private insurance to provide terrorism insurance,” says Jeffrey DeBoer, president of the Real Estate Roundtable. “We think this bill does that. There may be a provision here and there that everyone in the coalition may have wished turned out different because of their parochial interests. But it gets the market stabilized.”

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