House Provision For Study Of Life Industry Backup Needs Tweaking
The House Financial Services Committee acted wisely by including a provision in the Terrorism Risk Protection Act calling for a study of the circumstances in which the life insurance industry might need federal assistance following a terrorist attack.
The committee also deserves kudos for including an agent representative as part of the commission that will conduct the study.
The terrorist tragedy of Sept. 11, and the unexpected loss of some 5,000 lives, forced the insurance industry to confront an unprecedented situation.
There is widespread agreement that no one could have anticipated the extraordinary circumstances that led to the tragedy, nor adequately prepared for the subsequent economic fallout.
Indeed, the property-casualty side of the business now faces an emergency situation that necessitates government action. Without a federal backstop, terrorism risks on the p-c side might go uninsured.
The situation arising out of Sept. 11 is not nearly as dire on the life insurance side, which is why a study now is a good idea. It is conceivable that a future attack would take the form of biological terrorism, which could have a tremendously greater impact on the life insurance industry than did the attacks of Sept. 11.
Not only will the study help to identify those circumstances in which federal assistance might be necessary, it will hopefully identify a mechanism for doing so that can be implemented quickly and smoothly on an emergency basis.
That is why it is also a good idea to include an insurance agent representative on the commission.