Senators were preparing today to introduce a bill that would add group life insurers to the federal terrorism reinsurance program.[@@]
The bill is being drafted by staff members for Sens. Robert Bennett, R-Utah, and Chris Dodd, D-Conn. Dodd and his staff negotiated far into the night directly with the White House in November 2002. Their work led to the enactment of the current version of the Terrorism Risk Insurance Act.
Sens. Charles Schumer, D-N.Y., Saxby Chambliss, R-Ga., and Jim Bunning, R-Ky., also are providing strong support for the new TRIA bill.
According to officials at the Property Casualty Insurers Association of America, Des Plaines, Ill., the bill contains several improvements over the original legislation, including language that specifies that group life insurers will be covered to the same extent as property-casualty insurance writers.
The current law gives the U.S. Treasury Department authority to include group life insurers in the TRIA program. So far, the department has refused to do so, citing reports that indicate that group life insurance is readily available.
One key provision of the Bennett-Dodd bill calls for a so-called “soft landing,” which means that the federal reinsurance coverage would extend until an insurance contract ran out. Federal reinsurance coverage would not automatically expire Dec. 31, 2007, when the program would be set to terminate.
Under the TRIA law now in effect, TRIA is set to expire Dec. 31, 2005. All federal support is supposed to cease at that time, regardless of when a policy that was backed by the TRIA program expires.
The new bill also would keep the company loss deductible at 15%. The deductible rate is now supposed to rise to 15% in 2005. Legislation introduced by House Republicans a month ago seeks to raise the threshold to 20% in the out-years, something the industry believes is inappropriate.
The imminent introduction of the Senate bill “is an extremely positive development in the effort to extend TRIA and protect Americans and the nation’s economy from the devastating financial impact of future terrorist attacks,” says Carl Parks, senior vice president of federal government relations at the PCI.
“The cornerstone of the Senate bill, like the 2 measures introduced recently in the House, is a 2-year extension of the economic safety net,” Parks says. “The fact that senators on both sides of the aisle co-sponsored this proposal further drives home the point that TRIA is important to every business and consumer, and that partisan politics will not stand in the way of doing what’s best for the country and its citizens.”