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Fed insurance plan weighed
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October 16, 2001: 7:03 a.m. ET
Administration said to consider 3 years of coverage for terrorist acts.
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NEW YORK (CNNmoney) - The Bush administration is looking at a government program to provide temporary insurance coverage against acts of terrorism, according to a published report Tuesday.
The Wall Street Journal said that the pool would cap private insurance and reinsurance companies' liabilities at only 20 percent of the first $20 billion of damages in the first year of the program.
The private sector's exposure would rise to all of the first $20 billion in claims and half the claims between $20 billion and $40 billion by the third year, according to the Journal. After that the private market would be responsible for all claims arising out of acts of terrorism.
The paper said while the insurance industry should have the resources to cover losses by the Sept. 11 terrorism attacks, there is a looming crisis on future coverage. Major reinsurance firms, which act as insurance companies for insurers, have said they won't continue coverage for acts of terrorism after Dec. 31. The paper quotes the American Insurance Association as saying about 70 percent of U.S. commercial policies with terrorism clauses expire on that date.
Without that coverage being available in the private market banks may hesitate to approve loans for a variety of companies from real estate and construction to retail and manufacturing, the paper reported.
The Bush administration is seeking sponsors for its insurance plans this week and hopes to have a plan approved before Congress adjourns possibly as soon as later this month, the Journal said. 
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