Although most of the attention on the issue of a federal role in terrorism insurance is focused on the property-casualty industry, the life insurance industry is coming under some scrutiny as well.
At issue is the proposal by the American Council of Life Insurers, Washington, to establish a federal commission to examine possible scenarios that could lead the life insurance industry to seek assistance from the federal government.
Jacques E. DuBois, a member of the executive board of Swiss Re, told a recent meeting of the National Association of Insurance Commissioners, that while the life insurance losses arising from the Sept. 11 terrorist attacks are a small fraction of those experienced by p-c insurers, life insurers are nonetheless at risk.
There are concerns, he says, that certain types of terrorist attacks could lead to a substantial loss of life with relatively little property damage.
That, DuBois says, is why ACLI is requesting that Congress create a commission to study the possibilities.
If anything, DuBois says, the life insurance industry has not been moving with the appropriate speed on this issue.
The industry, he says, has been slow getting to the table.
Swiss Re, DuBois says, strongly supports including the commission plan in any terrorism insurance legislation that moves through Congress.
But J. Robert Hunter, director of insurance for the Consumer Federation of America, criticizes the commission proposal, calling it a “misuse” of the commission process.
If ACLI has a proposal for a federal role in financing terrorism-related losses for life insurers, it should put it on the table and let people take shots at it.
Gary Hughes, senior vice president with ACLI, responds that it is “nonsensical” to suggest that the ACLI proposal is an abuse of the commission process.
Congress, he says, commissions studies all the time on issues like this.
The life insurance industry, Hughes says, feels it needs a study. This is not window dressing, he adds.
Any study could very well conclude that any federal role in life insurance is inappropriate, he says.
But Hughes says that before any conclusion can be reached, a study needs to be done on whether some type of government mechanism involving life insurance is necessary, and if so, what that mechanism should be.
A lot of ideas are floating around, he notes, and a lot of people in the industry view the situation seriously. But there are a lot of unknowns, Hughes says.