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June 23, 2004 at 08:00 PM
The Treasury Department may have to decide again whether to include group life insurance in the federal terrorism reinsurance program.[@@]
A bill just introduced in the U.S. House of Representatives, H.R. 4634, would extend the Terrorism Risk Insurance Act for 2 years, until the end of 2007. However, it also would increase the insurance company deductible and the retention level.
Moreover, the legislation does not affirmatively include group life in TRIA. Rather, it calls for another Treasury Department determination on group life. An earlier Treasury determination came out against including group life.
Phil Anderson, a representative of the Group Life Coalition, Washington, praises the introduction of H.R. 4634 but adds that it is important to include group life.
“As Congress works to extend TRIA, it’s important for lawmakers to remember that we need to insure the people inside the buildings, too,” Anderson says.
He cites a recent study which says that a major terrorist attack could cost the group life industry more than $9 billion.
“Without the protection of TRIA, losses of this magnitude could have a severe impact on the cost and availability of group life insurance,” Anderson says.
Jack Dolan, a representative of the American Council of Life Insurers, Washington, says that the ACLI is certainly pleased that group life is mentioned in H.R. 4634.
The ACLI’s preference, he says, is for Congress to instruct Treasury to include group life in TRIA.
Still, Dolan says, H.R. 4634 will serve as a placeholder and the ACLI will work to improve it during the legislative process.
One of the primary sponsors of the legislation, Rep. Richard Baker, R-La., said at a press briefing that he and the other co-sponsors are open to discussions with all stakeholders.
Baker added that he does not think there will be more than one extension of TRIA.
He took issue with some critics who charge that TRIA’s structure inhibits development of private-sector solutions to the problem of terrorism insurance.
Baker said he certainly has not reached that conclusion, noting that the Treasury Department is engaged in a study to determine whether the capital markets can finance terrorism risk.
He added that terrorism insurance is vital for job creation. Many people, Baker said, have charged that the current economic recovery is a “jobless” recovery.
