Table: Covering Terrorism

The government's plan to backstop insurers should include the following:

DEDUCTIBLES

By requiring the industry to pay up to $10 billion in damages, the U.S. will encourage them to promote tighter security.

REPAYMENT BY CARRIERS

To avoid padding carriers' profits, the U.S. should charge premiums. That way taxpayers recapture the cost of protecting insurers.

LIMITS ON LAWSUITS

Caps on punitive damages may not be possible. As a compromise, claims should be consolidated in one federal court.

PROFIT INCENTIVE

The carriers' backstop should be expensive and stringent enough to encourage private reinsurers to compete to cover terror risks.

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