The Treasury Department would again have to decide whether to include group life insurance in the federal terrorism reinsurance program under legislation introduced in the House of Representatives.
The legislation, H.R. 4634, would extend the Terrorism Risk Insurance Act for two years until the end of 2007. But it would also increase the insurance company deductible and 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 spokesman for the Group Life Coalition, 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,” he says.
Anderson cites a recent study which says 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,” he says.
Jack Dolan, a spokesman for the American Council of Life Insurers, says ACLI is certainly pleased group life is mentioned in the legislation. But 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 ACLI will work to improve it during the legislative process.
One of the primary sponsors of the legislation, Rep. Richard Baker, R-La., says he and the other co-sponsors are open to discussions with all stakeholders. Speaking at a press briefing, Baker said 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 says he certainly has not reached that conclusion, noting that Treasury is engaged in a study to determine whether the capital markets can finance terrorism risk.
He adds that terrorism insurance is vital for job creation. Many people, Baker says, have charged that the current economic recovery is a “jobless” recovery, so it would be “stupid” to take away a tool, TRIA, that creates new jobs.
Rep. Pete Sessions, R-Texas, a co-sponsor of H.R. 4634, says the supporters want to work with Treasury on a long-term solution. This legislation, he says, is the starting point for discussions.
The goal, Sessions says, is to have another answer in place by 2007 that is supportive of jobs and in the best interest of the country.
But TRIA extension, he adds, is urgently needed in the marketplace, and he wants Congress to approve an extension before it adjourns for 2004.
Rep. Sue Kelly, R-N.Y., says there is no reason to delay TRIA extension. “It is better to have a program in place and not need it, than to need a program and not have it.”
She notes that TRIA extension has strong bipartisan support in the House.
Recently, she says, more than 180 House members sent a letter to Treasury Secretary John Snow urging the Bush administration to support extension. That, Kelly says, is already very close to the 218 votes needed to pass the legislation.
Rep. Eric Cantor, R-Va., says it is important to assure that TRIA remain in place because the certainty it provides will help continue the economic expansion.
H.R. 4634 would extend TRIA until Dec. 31, 2007, and require insurance companies make terrorism insurance coverage available for all the years of the program.
It would maintain the current 15% insurer deductible in 2006, but increase it to 20% in 2007.
It would also increase the current $15 billion industry retention to $17.5 billion in 2006 and $20 billion in 2007.
The legislation would have Treasury issue a report on long-term solutions for expanding the availability and affordability of terrorism insurance without a federal backstop.
Reproduced from National Underwriter Edition, June 25, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.