NU Online News Service, Dec. 4, 12:27 p.m. — Washington
The Treasury Department is seeking detailed information about the group life insurance market to help it decide whether group life should be included in the recently enacted federal terrorism reinsurance program.
The terrorism insurance legislation requires Treasury to hurry to prepare a study on the effects of terrorism risk on group life insurers and on the availability of group life coverage, Treasury Under Secretary Peter R. Fisher said at a press briefing Tuesday.
Fisher said Treasury will soon publish a request for public comments in the Federal Register. The department wants information about who the buyers and sellers of group life insurance are and how they are brought together.
The request asks how the group life market is regulated in the United States, and whether there are significant differences in the ways different states regulate group life products.
The request also asks about risk exposures of policyholders, including the degree of concentration both by locality and type of employer.
In addition, the request asks for details about the availability and price of group life reinsurance both before the Sept. 11, 2001, terrorist attacks and after. Treasury is asking for specifics about the type and amount of coverage available, deductibles, sublimits and renewability.
Treasury is also asking about current capacity and the availability of alternate sources of reinsurance, such as through capital markets.
In particular, Treasury wants evidence showing whether group life insurers have reasonable access to adequate and affordable catastrophe reinsurance, and if not, why inclusion in the new federal reinsurance program would correct the situation.
Respondents are supposed to compare the magnitude and scope of the problems facing group life insurers to those facing property-casualty insurers.
Finally, Treasury says, it is assuming that the provisions for property-casualty insurers in the terrorism reinsurance legislation would be suitable for group life insurers, if it is appropriate to include group life insurers in the program at all.
But, if respondents believe existing provisions are not appropriate, Treasury wants them to explain what changes they think would be needed to implement a program suitable for group life insurers.
Comments will be due 30 days after the request is published in the Federal Register.