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House OK's renewing terror insurance act

WASHINGTON -- The government would continue to guarantee insurance coverage for catastrophic losses from terrorist attacks but private companies would have to pick up more of the initial tab under legislation passed yesterday by the House.

The measure, approved on a 371-to-49 vote, would extend for two years the Terrorism Risk Insurance Act, which Congress passed in 2002 to help revive the economy after the Sept. 11, 2001, attacks.

The Senate passed a similar bill last month, and the two chambers must now work out differences before concluding their work for the year, probably at the end of next week. The existing act expires on Dec. 31.

Both the House and Senate bills, at the urging of the Bush administration, took steps to shift more of the financial burden to the private sector with the goal of eventually eliminating government participation.

Both bills would increase the amount of property and casualty losses that would trigger federal payments -- rising from $5 million to $50 million in 2006 and $100 million in 2007. Insurer deductibles would rise from 15 percent to 20 percent.

The federal share under the House bill, after deductibles, ranges from 80 percent of aggregate insurance industry losses of less than $10 billion to 95 percent of losses above $40 billion.

Supporters said the bill was meant to ensure that the insurance industry had the backup to offer terrorism coverage so investors and construction companies have the confidence to initiate new projects.

The legislation helps assure that economic activity in US cities can go on uninterrupted, said Representative Barney Frank, Democrat of Massachusetts. ''The alternative is to let the terrorists put a terrorist tax on building large buildings in our large cities and we should not allow that."

The legislation, said the Coalition to Insure Against Terrorism, a group of business insurance policyholders, was important so ''the nation has a sound policy in place to enable the economy to quickly recover should another terrorist attack occur in the United States."

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