The Senate Banking Committee may hold a hearing March 3 on whether the Terrorism Risk Insurance Act should be extended.[@@]
A spokesman for the committee would neither confirm nor deny the date, but insurance industry lobbyists say TRIA will be the first insurance issue that the committee will take up. The lobbyists expect one of the witnesses to be a life industry representative who will talk about expanding TRIA to include group life insurance.
In the mean time, whatever happens to the scheduling or witness list for the TRIA hearing, the American Council of Life Insurers, Washington, will be talking to the committee about the importance of including group life, according to ACLI spokesman Jack Dolan.
“People, not just bricks and mortar, deserve coverage,” Dolan says.
The timing of the hearing is a surprise, because a Treasury report on the utility of the program is not due until June.
The current TRIA program does not protect group life insurers, but a TRIA bill passed overwhelmingly by the House Financial Services panel in September 2004 would have added group life insurance to the program. Inclusion of group life insurance also has strong support in the Senate.
Joel Wood, chief federal lobbyist for the Council of Insurance Agents and Brokers, Washington, says the insurance industry believes the House Financial Services Committee “will be there to act” when called upon. “I wouldn’t be surprised to see [Rep. Mike Oxley, R-Ohio, chairman of the committee,] hold off on committee action in order to gauge whether action on this bill is achievable in the Senate.
Meanwhile, Aon Corp., Chicago, has issued a report arguing that TRIA must be extended.
“After a fairly chaotic introduction, TRIA ? with a few exceptions ? has largely fulfilled its short-term public policy goal of creating a readily available supply of terrorism capacity at affordable prices,” Aon experts write in the report. “Even with substantial net insurer retentions, TRIA has clearly benefited market capacity and pricing.”
Analysts at the Congressional Budget Office recently suggested that scaling back TRIA might reduce total losses in the event of an attack, by encouraging companies to do more on their own to prepare for an attack.
The authors of the Aon report question that conclusion.
“The long-term picture for the terrorism risk market remains as unclear as the risks it insures,” the authors of the Aon report write. “No viable alternative funding mechanisms for this risk have emerged from the capital markets or from private market pooling arrangements.”
Recent studies by the Government Accountability Office and the American Academy of Actuaries, Washington, acknowledge the difficulty of relying on private means to reducing losses resulting from terrorist attacks, according to the Aon report.