The United States might have something to learn from Old Europe, at least in the area of terrorism risk insurance for American hotels, office buildings and shopping malls.
After the attacks on New York's World Trade Centre of September 11, 2001, which caused insured losses of $32.5 billion, France set up a government-backed insurance pool to pick up damage costs if similar attacks happen there.
Britain, with its history of bomb attacks by the Irish Republican Army, already had a pool into which insurers pay premiums. Should the pool's assets run out, the government is committed to cover claims. Germany and Spain also have terrorism insurance programs with state guarantees.
But the US Congress in 2002 opted for a temporary framework, with the government agreeing to act as reinsurer of last resort if insurers cannot handle massive damages from terrorism attacks. This arrangement has been extended once already and expires again at the end of 2007.
The Real Estate Roundtable lobbying group says instead of seeking another extension of that law - which was politically difficult last time - Congress might want to pass a law embracing the pool approach.
"It's certainly worked in the UK, it's worked in France, it's also worked in Australia," said Jeffrey DeBoer, president of the Roundtable, which is comprised of property ownership and development firms, as well as real estate trade associations. "We think it is something that deserves a great deal of dialogue here," he told Reuters in an interview.
The arrest last week of seven men for conspiring to attack the landmark Sears Tower in Chicago is another example of why a long-term insurance solution is needed, experts said. But politics poses another challenge.
"The last time we talked about a pool, after September 11, the (Bush) administration and Congress made it clear they didn't want to be involved in the marketplace to that extent," said Julie Rochman of the American Insurance Association.
The administration will weigh in this fall, when the President's Working Group on Financial Markets is expected to produce a report on the availability of terrorism insurance.
Meanwhile, the Real Estate Roundtable sent letters last week to insurers suggesting setting up "Homeland Security Mutual," a voluntary pool to insure the insurers for terrorism losses. It would be modeled after Britain's Pool Reinsurance Company Limited.
The US program now in place, the Terrorism Risk Insurance Act (TRIA), operates on trigger points. When company losses get too high to handle, federal funds become available.
The idea of a pool, in contrast, is that it builds up private industry funds and allows the government's role to diminish over time, DeBoer said. Current law only backstops losses from acts of foreign terrorism, but Roundtable members think the pool should cover domestic terrorism as well.
DeBoer says the goal should be for the pool system to be able to compensate for losses around $30 billion - above which the federal backstop would kick in. That is slightly above current law, which sets aggregate insurance industry retention for terrorism losses at $27.5 billion in 2007.
The real estate industry is concerned because insurers after September 11 said they could not offer terrorism insurance. "If the free market would handle it, we would like nothing more. But the feedback we got, there was no way they could judge the magnitude" of future attacks, said Chris Nasetta, president of luxury hotel operator Host Hotels & Resorts Inc.
There is a "modest" private reinsurance market for acts of terrorism, worth $6 billion to $8 billion, but this is nowhere near the risk insurers are required to retain, said Frank Nutter, president of the Reinsurance Association of America.