Group life insurers would be covered under legislation that was scheduled to be introduced in the Senate last Thursday that allows for a two-year extension of current federal terrorism reinsurance coverage.
The bill is being drafted by staffers of Sens. Robert Bennett, R-Utah, and Chris Dodd, D-Conn. Dodd and his staff negotiated directly with the White House in November 2002, negotiations that led to enactment of the current bill, the Terrorism Risk Insurance Act. Also strongly supporting the bill are Sens. Charles Schumer, D-N.Y., Saxby Chambliss, R-Ga., and Jim Bunning, R-Ky.
According to officials at the Property Casualty Insurers Association of America, the bill contains several improvements over the original legislation, including the language specifying that group life insurers will be covered to the same extent as property/casualty insurance writers. The current legislation gave the authority to include group life insurers totally to the Treasury Department, which has refused to do so, citing reports that indicate this coverage is readily available.
Key improvements in the Bennett/Dodd bill are language calling for a so-called “soft landing,” which means that the federal reinsurance coverage extends until the specific contract runs out, and does not automatically expire on Dec. 31, 2007, when the program runs out, and extension of the current make/available provision. The current bill expires Dec. 31, 2005, and under the current language all federal support would cease.
“The soft-landing provision is a key factor for both insurers and consumers,” said Joseph Annotti, a PCI staff official.
The bill would also keep the deductible at 15%, the rate that the deductible rises to in 2005, the third year of the program. Legislation introduced by House Republicans a month ago raises the threshold to 20% in the out-years, something the industry believes is inappropriate.
Ed Harper, senior vice president, government relations in Washington for Assurant, the spun-off U.S. unit of Fortis, responded to the legislation by saying, “Were delighted that a bipartisan group of senators has decided to include group life in the extension of the TRIA bill. We understand the coverage for group life coverage will be analogous to that given property/casualty carriers, and we will be looking forward to seeing the exact language.”
Assurant is a member of the coalition of group life carriers that has been seeking coverage under TRIA for their business since the middle of 2002.
Reproduced from National Underwriter Edition, July 22, 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.