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Insurers may pull coverage
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November 13, 2001: 7:14 a.m. ET
Firms could cancel terrorism plans if assistance plan is not passed.
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NEW YORK (CNN/Money) - Insurance companies have started warning policy holders that terrorism coverage will be canceled in 45 days as Congress continues to debate an insurance assistance plan, according to a published report Tuesday.
Insurers are also asking states to exempt them from offering terrorism coverage after Dec. 31 if a bill is not passed by the end of the year, according to the Wall Street Journal.
"With each day the federal legislation isn't passed, pressure mounts on commercial insurers to withdraw from lines of business that unduly expose their capital to these potentially large and unpredictable risks," Steve Dreyer, head of insurance ratings at Standard & Poor's, told the Journal.
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The hesitation of insurers to offer policies with terrorism coverage could leave the already sputtering economy in an even bleaker situation.
Companies without terrorism coverage will have to purchase it separately when it was once included in traditional policies or go without the coverage.
Many insurance firms and the companies they cover will find it difficult to secure loans from commercial lenders without terrorism coverage.
The House Financial Services Committee passed a bill limiting insurers to the first $1 billion in damages from any terrorist attack, with the government picking up 90 percent of the remainder up to $20 billion. Insurers would eventually have to repay the subsidy however, according to the paper.
Congress is considering a bill in which insurers would have to pay $10 billion before the government aid begins.
The insurance industry is paying all of the claims -- $40 billion to $70 billion -- from the Sept. 11 attacks, except those covered by the airline assistance package. 
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