More than a year after Sept. 11, concerns remain about the insurance industry's ability to cover future acts of terrorism. Industry executives would have us believe that their inability to afford terrorism coverage will, in turn, cause banks to refuse to finance new construction, especially for major projects like office buildings. Both the House and Senate have passed bills to bail out the industry, which are now being negotiated in a House-Senate conference committee.

Immediately following Sept. 11, many business analysts jumped on the terrorism insurance bandwagon, supporting the claim that the only way to prevent the economy from coming to a standstill was for the federal government to provide reinsurance. Although insurance executives told Congress that the government needed to act before commercial policies containing terrorism insurance clauses expired, terrorism insurance has remained widely available, except for a few instances in Chicago and New York or involving skyscrapers. In fact, the price of it continues to fall drastically, according to industry sources.

Insurance firms have bounced back from the single most costly event in insurance history thanks to an influx of money from higher premiums and new capital. If anything, Sept 11 was more of a cash cow for the industry than a bank breaker. Just days after Sept. 11, Marsh & McLennan Cos., the world's largest insurance brokerage, started planning the formation of a new subsidiary to sell corporate insurance with high rates. At least five other new companies were eventually created by other firms that wanted to seize what they saw as a money-making opportunity.

The insurance industry has always rebounded quickly after major disasters, generally because the fear of another disaster increases demand for insurance, raising its price. After Hurricane Andrew devastated southern Florida in 1992, hurricane insurance premiums immediately shot up, quickly refilling insurance companies' cash reserves. Likewise, by November 2001, insurers had raised prices by 100%, or more, on some of their commercial and industrial policies, and stock prices for the insurance sector increased by 7%.

It is great news that insurance companies managed to get things back on track without any government support. Because traditional terrorism insurance was too unpredictable to price accurately, alternatives quickly developed to replace it. Unlike the airline bailout, where the government acted quickly, terrorism insurance legislation was held up in Congress, the undisturbed insurance market adjusted on its own.

It took until June 17, 2002, for terrorism insurance bills to be passed in both the House and Senate. Although the two bills differ in implementation, the outcome is the same: taxpayers bear the brunt of the financial burden.

A year after Sept. 11, it is crystal clear that the only effect of a terrorism insurance bill would be to help profitable insurance corporations profit even more from tragedy. There is plenty of evidence showing that the need for a terrorism insurance bailout has nearly vanished. Insurers have offered very little proof to justify exposing taxpayers to sizable risks in the event of future terrorist attacks.

If anything, lawmakers should focus on passing a targeted bill that offers terrorism insurance coverage to highest risk targets such as major skyscrapers and should require insurers to pay back assistance that is received from these locations.