Push To Expand Terrorism Act To Include Group Life
The Terrorism Risk Insurance Act should be expanded to include group life insurance, says a senior member of the House Financial Services Committee.
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“Group life insurance has characteristics similar to commercial property-casualty insurance in that there is excessive concentration of risks,” says Rep. Paul Kanjorski, D-Pa., who spoke during a hearing.
Group life insurers have remained in the marketplace, he says, despite a lack of reinsurance, and this has caused a significant amount of anxiety both in the life insurance industry and among people who obtain their life insurance coverage through their employers.
New York Insurance Superintendent Greg Serio agrees. In testimony before the committee he said that a Treasury Department decision in August 2003 against extending TRIA to group life insurance has left a “wide gap.”
Even the Treasury Secretary acknowledged at the time he made this decision that there was a general lack of catastrophic reinsurance coverage for group life insurers, Serio says, and this lack of reinsurance continues today. Without reinsurance, insurers will find it increasingly difficult to assume this risk on their own.
Congress, Serio says, needs to consider seriously inclusion of group life policies under TRIA in any discussions about its reauthorization.
Wayne A. Abernathy, Assistant Treasury Secretary for Financial Institutions, says the decision to exclude group life was based on provisions in the statute where Treasury was required to make two inquiries. One, he says, was whether private reinsurance was available, and here, Treasurys study showed it had receded.
However, the second inquiry was whether primary coverage had receded and Treasury found that it had not significantly.
As a result, he says, the test of whether to extend TRIA to group life was not met. “Our hands were tied,” Abernathy says.
Meanwhile, an organization of insurance and business groups has launched a major lobbying effort to include group life in any TRIA reauthorization.
The American Council of Life Insurers, the Financial Services Roundtable and the Group Life Coalition, which represents insurers that offer group life, are running advertisements in Capitol Hill newspapers calling for inclusion of group life.