More than a year after the World Trade Center and Pentagon attacks, manufacturing and other businesses vulnerable to terrorist attacks are still waiting for help on obtaining terrorism insurance. With a terrorism insurance bill close to passage, many business projects that have been held up by lack of coverage, high cost of coverage, or partial coverage are expected to get moving again—unless other confidence-shattering events occur.

While timing of final passage was still up in the air shortly before Election Day, pressure on both parties for final passage is mounting. Reason: Lack of adequate coverage at reasonable cost is a significant drag on the economy. Examples:

• The Air Transport Association claims that the cost of terrorism insurance is almost one quarter of the total estimated $4 billion impact on the industry from the events of 9/11.
• A survey by the Risk and Insurance Management Society, which represents more than 80% of Fortune 500 companies and many other insured businesses, finds that two-thirds of companies have no terrorism coverage.
• A Real Estate Roundtable survey says that in the year after the September 2001 attack, more than $15.5 billion in real estate projects in 17 states were stalled or cancelled.

This is why President Bush put passage of the bill high on his agenda after he obtained congressional backing for a possible war against Iraq. Passage will create thousands of jobs and billions in investments, he claims.

The House and Senate have passed similar versions of a terrorism insurance bill that would have the federal government pick up most of the claims beyond certain limits. The differences on the limits seem negotiable. The hot issue holding up final passage is whether insured property owners should be shielded from punitive damage awards in civil lawsuits if found negligent in protecting against attacks. The White House favors the House version, which would ban all punitive damage awards.

"When an American business has been targeted for a terrorist attack, we should not further punish it and the people it employs, subjecting it to predatory lawsuits and punitive damages," the president says.

Some Senate Democrats, however, don't want property owners to be completely shielded. Two Democratic senators (Christopher Dodd, Conn. and Charles Shumer, N.Y.) have argued to barring suits for punitive damage unless there is "clear and convincing evidence of willful or criminal conduct, flagrant indifference to the rights or safety of the individual harmed."

Meanwhile, the Consumer Federation of America (CFA) claims that a terrorism insurance crisis doesn't exist, and that rates are falling. A CFA report concludes that across-the-board reinsurance for terrorism losses at low levels, as proposed in both the Senate and House, is not needed.

"The best thing that Congress could do [is to] offer targeted assistance to the relatively few businesses that can't get terror coverage, like some skyscrapers," says Travis Plunkett, CFA's Legislative Director.

The argument over punitive damages appears similar to of the debates in the 1970s over capping product liability awards after insurance premiums spiked. As product liability premiums stabilized, the steam behind passing federal caps has flagged.

In the post September 11 world, however, the risks of economic damage from inadequate insurance are much more widespread than from a shortage of general product liability coverage. This session of Congress should not end before it mitigates the risk to jobs and businesses from potential billions of actual losses and added billions in unreasonable punitive damages.