The U.S. House Financial Services Committee approved a Terrorism Risk Insurance Act reauthorization bill today after agreeing to add group life to the program.[@@]
The bill, H.R. 4634, would extend the TRIA safety net program for 2 years, until Dec. 31, 2007.
The American Council of Life Insurers, Washington, is praising the decision to add group life to TRIA.
“ACLI has long argued that TRIA is seriously flawed because of its failure to cover the lives of people,” ACLI President Frank Keating says in a statement. “It is sound policy to make sure insurers can offer coverage for bricks and mortar, but it would be even sounder public policy to make sure American workers’ lives are protected in TRIA as well.”
The Financial Services Committee’s actions on the TRIA reauthorization bill show that it understands the risk millions of workers could face as a result of lack of access to reasonably priced catastrophe reinsurance for acts of terrorism, Keating says.
“By reauthorizing TRIA with group life, Congress will provide a mechanism for calming life insurance markets should another attack occur,” Keating says. “If no attack occurs, there will be no expense to government or industry. If an attack does occur, group life will be covered by the terrorism risk insurance pool and insurers will be able to maintain protections for American workers and their families, most of whom are covered by group life insurance plans.”
Philmore Anderson, a spokesman for the Group Life Coalition, which represents insurers that sell group life, applauded the committee’s success at adding group life to TRIA. He says the coalition will work to get the bill moved quickly through Congress.
The “bipartisan effort to extend TRIA and group life comes at a critical time as this legislation protects the economy, jobs, buildings, and, most importantly, people’s financial security,” Anderson says.
The TRIA reauthorization bill was introduced in July by Reps. Richard Baker, R-La., chairman of the Financial Services Committee’s Capital Markets Subcommittee, and Pete Sessions, R-Texas. It would extend the current TRIA legislation for 2 years, retaining the 15% individual company retention level scheduled to go into effect Jan. 1, 2005, through 2006, and increase the retention level to 20% in 2007.
The provision adding group life was passed on a voice vote as part of a manager’s amendment. Rep. Michael Oxley, R-Ohio, chairman of the Committee, explained the inclusion of group life by stating that, in the 3 years after the Sept. 11, 2001, terrorist attacks “it has become clear that the catastrophic reinsurance market for group life has not emerged as we had hoped.”
The bill was reported out on a voice vote after 2 Democrats withdrew an amendment that would have provided a soft landing. The soft landing would have extended the legislation into 2008 for all 1-year contracts entered into in 2007.
Because the bill contained language that in principle is being supported by the Bush administration as well as conservatives in the House, it will likely face an easy path to enactment before Congress adjourns by either Oct. 8 or Oct. 15. It is likely to be passed in some form by the full House by next Thursday.
Similar legislation is pending in the Senate.
Michael Lovendusky, a senior counsel and lobbyist at the ACLI, did say that group life insurers will continue their efforts to amend the bill to get a separate pool for group life carriers. “We hope to have this bill improved either through text or the accompanying report so as to create a separate pool for group life carriers,” he says. Lovendusky says group life insurers want the separate pool because it is important to protect the different sectors of insurance from unfairly having to subsidize terrorism losses in the respective sectors.”