"The terrorist attacks of September 11 resulted in the largest insured catastrophic loss in history, estimated to total as much as $70 billion. Even though the insurance industry committed to pay losses resulting from the attacks, industry spokesmen asserted that in view of the impending unavailability of terrorism reinsurance on January 1, 2002, primary insurers would not be able to cover future terrorism losses on renewals of commercial risk policies without a federal backstop. In the 107th Congress, first session, the House of Representatives passed H.R. 3210 on November 29, 2001, providing for a temporary federal backstop. In the Senate, four similar measures were introduced (S. 1743, S. 1744, S. 1748, and S. 1751), but after weeks of negotiations no action was taken. Senate Majority Leader Tom Daschle indicated that backstop legislation would be considered again in 2002. Meanwhile, there are indications that the insurance marketplace will have made strides toward resolving a major part of the terrorism coverage issue and federal legislation may be less likely to have its originally intended impact. This report looks at the terrorism insurance marketplace in 2002 in the absence of federal legislation, the economic outlook for the insurance industry, and the regulatory responses of state insurance officials. This report will be updated as events warrant."
CRS Report for Congress, RS21106